10 Best Strong Buy AI Stocks to Invest In

6. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 72

Datadog, Inc. (NASDAQ:DDOG) is a software-as-a-service (SaaS) firm that enables software firms to monitor their cloud infrastructure and amalgamate the monitoring of different microservices under a single platform. The firm has a presence in the AI industry through its machine learning powered solutions for monitoring and its AI engine, Watchdog.

The start of November was a busy month for Datadog, Inc. (NASDAQ:DDOG) as it came to analyst coverage. After the firm’s third-quarter earnings report, analysts from RBC, Cantor Fitzgerald, and TD Cowen raised their share price targets for the firm. Among these, RBC Capital kept its Outperform rating for Datadog, Inc. (NASDAQ:DDOG)’s shares and increased the price target to $216 from $182. The research firm outlined that Datadog, Inc. (NASDAQ:DDOG)’s latest quarter had demonstrated non-AI growth and added that OpenAI renewing its contract with the firm also removed some of the uncertainty.

Datadog, Inc. (NASDAQ:DDOG)’s shares have experienced quite a bit of turmoil over the past month. They soared by 23% after the firm reported $885.7 million in third-quarter revenue and $0.55 in adjusted earnings to beat analyst estimates for both metrics. Datadog, Inc. (NASDAQ:DDOG) also benefited from its midpoint $914 million in fourth quarter earnings guidance that beat estimates of $887 million.

On the hedge fund front, 72 hedge funds covered by Insider Monkey’s database had disclosed holding Datadog, Inc. (NASDAQ:DDOG) in their third quarter 13F filings. One notable holding was Renaissance Technologies, whose position marked an 89% increase over the number of shares held in the previous quarter.

During the Q3 earnings call, when asked by Morgan Stanley’s Sanjit Singh about enterprise trends in the non-AI market, Datadog, Inc. (NASDAQ:DDOG)’s CEO, Olivier Pomel, replied:

“Yes. I’d say there’s 3 parts to it. One part is the demand environment is not — is positive in general. I don’t know that we see massive acceleration of cloud migration, but at least the environment is not pushing the other way. We know which happens from time to time. So that’s point number one. Point number two is we’ve been growing sales capacity quite a bit, and we’ve created new go-to-market motions to go after the kind of customers who were not getting before. Like we’ve done quite a bit of investment over the past couple of years and we see that starting to pay off. As I said also, we feel good about Q4 in terms of pipeline on the sales side. So it’s too early to tell yet. We still have to close those deals, but we feel good about the scaling of our go-to-market.”