15 Best Growth Stocks to Buy for the Next 3 Years

7. Datadog Inc. (NASDAQ:DDOG)

3-Year Revenue CAGR: 37.67%

Number of Hedge Fund Holders: 83

Datadog Inc. (NASDAQ:DDOG) operates an observability and security platform for cloud applications. Its products comprise infrastructure & application performance monitoring, database monitoring, error tracking, workflow automation, application security management, sensitive data scanner, event management, and CI & LLM visibility, among others.

In Q4 2024, the company’s customer base rose by 42% year-over-year. Datadog’s existing customers are also increasingly adopting multiple products. In the past quarter, 83% of Datadog’s customers used more than 2 of its products, 50% used more than 4 products, while 26% used more than 6 products. The company’s larger enterprise customers have also grown, with 45% of the Fortune 500 now using Datadog. The company is now transitioning from AI hardware to AI software infrastructure.

Datadog Inc. (NASDAQ:DDOG) has a particular focus on its monitoring and analytics platform, which integrates infrastructure monitoring, application performance monitoring, log management, and cloud security for various enterprises. About 3,500 of the company’s customers adopted AI and ML integrations into their ML, AI, and LLM usage in Q4. On April 7, Jefferies analyst Brent Thill maintained a Buy rating on the stock with a price target of $135.

Parnassus Growth Equity Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its Q4 2024 investor letter:

“We also added several new positions, including two in Information Technology: Atlassian, a maker of innovative software that allows IT developers and other employees to seamlessly collaborate on complex projects, and Datadog, Inc. (NASDAQ:DDOG), a dominant cloud monitoring platform.

Datadog, a dominant cloud monitoring platform, should have outsized growth due to its category leadership, sticky product suite, best-in-class product innovation and highly regarded management team. We believe the market has misinterpreted cyclical headwinds, such as reductions in IT spending, as secular trends, and we see Datadog benefiting from growth in Cloud Infrastructure-as-a-Service.”