We recently compiled a list of the Jim Cramer’s Top 10 Bullish Stock Picks. In this article, we are going to take a look at where Datadog Inc. (NASDAQ:DDOG) stands against Jim Cramer’s other bullish stock picks.

In a recent episode of Mad Money, Jim Cramer expressed his enthusiasm for the current market, highlighting a significant historical perspective. He reminded viewers that 20 years ago, Google went public at $85 per share and closed its first day up 18%. While many traders were thrilled by this initial gain, looking back, it was a major missed opportunity. The stock has since delivered a 7,736% return, far exceeding the S&P 500’s return of just over 600%. This example illustrates the potential wealth individual stocks can offer compared to broader indices, especially if you choose wisely.

“Twenty years ago today, Google went public at a split-unadjusted price of $85 per share. On its first day, the stock closed up 18%. Many traders, thrilled by this initial gain, took the profit. In retrospect, this was one of the greatest mistakes of all time. It has since delivered a 7,736% return, compared to the S&P 500’s return of slightly more than 600% with dividends. This serves as a reminder of the wealth that individual stocks can generate compared to indices when you choose wisely. And I’m telling you, it’s not that hard if you know how to research. So, I think it’s time to reconsider the average approach, at least for today.”

Cramer noted that, despite a strong recent performance—with the Dow gaining 237 points, the S&P 500 up 0.97%, and the NASDAQ increasing by 1.39%—the short-term market outlook is more complex. The market is currently on its longest winning streak since November of last year, with 93% of S&P 500 stocks showing gains.

However, he cautioned that the market might be “overbought,” as indicated by the Market Edge oscillator, a tool Cramer has relied on since 1987. When the oscillator reaches plus five or higher, it signals that it might be time to sell. Conversely, readings of minus five or lower indicate oversold conditions, suggesting it’s a good time to buy.

“Even though it was another good day for the markets. we need to consider both the short-term and long-term outlooks. The short-term setup isn’t as favorable. We’re currently on a significant winning streak, with the market having risen for straight days, the longest streak since November of last year. Impressively, 93% of the S&P 500 stocks are up. “

This follows a Monday when the market dropped sharply due to the Yen carry trade imploding, which led to a wave of forced selling and subsequent panic.

“As I’ve often said, panic is not a strategy. Since that panic, the market has mostly been trending upward.”

Jim Cramer has also expressed concern about the upcoming Justice Department case challenging the search engine giant’s role in the advertising exchange market. This legal issue could have a significant negative impact on it, a company that has greatly benefited from this setup. A victory for the Justice Department could be even more damaging than the previous issue with Apple over default search engine payments, which contributed to its monopoly concerns.

According to Cramer, the resilience of tech giants is evident, with strong recoveries even after short-term dips. (see 33 Most Important AI Companies You Should Pay Attention To).

Jim Cramer emphasizes that investing in truly exceptional companies, rather than merely following market indices, usually leads to the best returns. Cramer advises investors to avoid panicking during market fluctuations and to maintain their focus on holding strong companies for long-term success.

“As we move forward, it’s important to remember that investing in truly great companies, rather than just following the index, often yields the best returns. The substantial gain from Google over 20 years exemplifies this. Avoiding panic during market turbulence and sticking with strong companies is crucial for long-term success.”

Our Methodology

In this article, we reviewed a recent episode of Jim Cramer’s Mad Money and highlighted ten stocks that he is optimistic about. We also included information on hedge fund sentiment for each stock and ranked them based on how many hedge funds own each one, starting with the least owned.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Datadog Inc. (NASDAQ:DDOG)

Number of Hedge Fund Investors: 79

Jim Cramer shared his thoughts on Datadog Inc. (NASDAQ:DDOG) when a viewer asked him about it. He acknowledged that Datadog Inc. (NASDAQ:DDOG) is generally a great company and noted that there were offers to buy it for $20 billion before it went public.

“Datadog is usually a fabulous company. There were people trying to buy it for $20 billion before it ever went public. My problem is that it’s just the definition of enterprise software—the kind of analytics that tells you how your company’s doing. There are too many players in that space. So I’m going to reiterate: I don’t trust it yet, but it is a very good company. And thank you for the question.”

Datadog Inc. (NASDAQ:DDOG) is a leading provider of observability and monitoring solutions, essential for managing complex IT systems and cloud environments. Its platform includes a wide range of tools for monitoring, security, and analytics, which has driven strong revenue growth. This growth is supported by increasing adoption among large enterprises and a growing customer base.

Datadog Inc. (NASDAQ:DDOG) continues to improve its offerings, recently adding new features like security monitoring and Application Performance Monitoring (APM). With a high customer retention rate and effective upselling and cross-selling of additional services, Datadog Inc. (NASDAQ:DDOG) enhances its growth and stability. As the demand for cloud-based monitoring solutions grows, Datadog Inc. (NASDAQ:DDOG) is well-positioned to benefit. Datadog Inc. (NASDAQ:DDOG)’s solid financial performance, including robust revenue growth, improving profit margins, and strong cash flow, highlights its potential for ongoing success.

The Brown Capital Management Small Company Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its fourth quarter 2023 investor letter:

“We recognize that EGCs do not grow in straight lines. They stumble and sometimes fall. But they also have inflection points that lead to step functions of growth and profitability. We have been well-served by staying invested during tough periods. In fact, our patience and tolerance often allow us to participate in significant upside when our long-term thesis materializes.

For example, Datadog, Inc. (NASDAQ:DDOG) is an EGC that has experienced stock price declines driven by near-term challenges. Datadog is a leading SaaS-based IT-monitoring and analytics platform that automates the real-time monitoring of infrastructure, application performance and networks. This enables Datadog’s customers to quickly identify and address performance issues in their networks. While competitors only provide a siloed view of cloud infrastructure, applications, logs or networks, Datadog is differentiated by providing a unified view across all these areas via a visual interface configured to the needs of individual users. The technology saves time, money and headaches by driving collaboration among development, operations and business teams; accelerating time-to-market of new software; reducing the time needed to resolve problems; improving infrastructure efficiency; and enabling a better understanding of customer behavior…” (Click here to read the full text)

Overall DDOG ranks 4th on our list of Jim Cramer’s top bullish stock picks. While we acknowledge the potential of DDOG as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DDOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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