Here’s What Supports Datadog’s (DDOG) Annual Share Gains

Baron Funds, an investment management company, released its “Baron Global Advantage Fund” investor letter for the second quarter of 2025. A copy of the letter can be downloaded here. In the second quarter, the fund returned 22.7% (Institutional Shares), compared to the MSCI ACWI Index’s (the Index) 11.5% gain and the MSCI ACWI Growth Index’s 17.3% gain. The Fund is up 11.2%, year-to-date, compared to gains of 10.1% and 9.3% for the benchmarks, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Global Advantage Fund highlighted stocks such as Datadog, Inc. (NASDAQ:DDOG). Datadog, Inc. (NASDAQ:DDOG) is an observability and security platform for cloud applications. The one-month return of Datadog, Inc. (NASDAQ:DDOG) was -4.67%, and its shares gained 31.91% of their value over the last 52 weeks. On August 4, 2025, Datadog, Inc. (NASDAQ:DDOG) stock closed at $139.13 per share, with a market capitalization of $48.049 billion.

Baron Global Advantage Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its second quarter 2025 investor letter:

Within IT, performance was strongest in systems software, driven by Cloudflare, Snowflake, Zscaler, and Datadog, Inc. (NASDAQ:DDOG), and semiconductors led by NVIDIA, Taiwan Semiconductor (TSMC), and indie Semiconductor. Datadog’s shares had a correction of 43% during the first half. At the same time, we judged their reported financial results to be strong and improving. The company demonstrated success expanding into the lucrative enterprise segment with new logo annual contract value up 70% year-on-year and gross retention of existing logos exceeding 99%. Datadog is seeing success with AI native companies, serving 8 of the top 10 AI companies including OpenAI, Anthropic, Cursor, Scale AI, and Replit. Four of these customers tripled spending with Datadog in 2024. Datadog’s innovation velocity helps strengthen its platform, and underpins a long duration of growth, supported by continual annual share gains.

Datadog (DDOG) Tumbles 11.4% on Analyst's "Sell" Reco

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Datadog, Inc. (NASDAQ:DDOG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held Datadog, Inc. (NASDAQ:DDOG) at the end of the first quarter, which was 83 in the previous quarter. Datadog, Inc. (NASDAQ:DDOG) reported revenue of $762 million in the first quarter of 2025, marking an increase of 25% year-over-year. While we acknowledge the risk and potential of Datadog, Inc. (NASDAQ:DDOG) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DATADOG, INC. (NASDAQ:DDOG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Datadog, Inc. (NASDAQ:DDOG) and shared the list of AI stocks analysts are watching closely. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.