Core Insights - Datadog has announced plans to establish a new data center in Australia, which will enhance local data storage and processing capabilities for its customers and partners, addressing local privacy and security requirements [1][2][5] Group 1: Data Center Announcement - The new data center will be built on AWS and will be Datadog's first in Australia, complementing existing locations in North America, Asia, Europe, and AWS GovCloud [1][5] - This facility aims to create sovereign data storage capacity, allowing Datadog's customers to meet local privacy and security preferences [2][5] Group 2: Customer Impact - Datadog's end-to-end observability solutions are expected to help organizations like Flight Centre and SEEK improve service quality and proactively resolve issues before they become critical [3][4] - The data center will support Australian companies in their cloud investments, digital transformations, and AI projects, particularly in regulated industries such as healthcare and financial services [5] Group 3: Company Growth and Strategy - Datadog is expanding its presence in Australia and New Zealand, with recent office openings in Melbourne, Sydney, and Auckland, indicating a commitment to the region [5] - The new data center is anticipated to open in the middle of 2025, further solidifying Datadog's role in supporting local businesses [5]

Group 1 - Louis Stevens is a former U.S. Army engineer officer with an MBA and a BA in political science, recognized as a leading analyst in the investing community, ranking in the top 0.1% according to TipRanks [1] - Louis created L.A. Stevens Research, which includes the LAS Index, a basket of stocks selected through a proprietary investment method that has consistently outperformed market indices since its inception [2] - The research and investment services provided by Louis cater to a diverse audience, including beginners, busy professionals, and seasoned fund managers [2]

Core Viewpoint - Datadog's stock has underperformed compared to the broader market and its industry, raising concerns for investors about its future performance and valuation [1][20]. Market Competition and Pricing Pressure - Datadog faces significant pricing pressure from competitors such as IBM, Microsoft, and Broadcom in on-premise infrastructure monitoring, as well as from cloud providers like Amazon, Google, and Microsoft in cloud monitoring [4] - Customers are increasingly cost-conscious, leading to contract renewals with discounts, which negatively impacts revenue growth. Some large enterprises are also considering in-house observability solutions, posing a threat to Datadog's long-term revenue [5]. Cost Escalations Might Hurt the Bottom Line - Datadog has experienced substantial cost escalations in R&D, sales and marketing, and general and administrative expenses, which increased by 29.4%, 31.3%, and 29.6% year-over-year, respectively, in Q4 2024. This trend is expected to continue into 2025, potentially hurting profitability [6]. Valuation Concerns - Datadog's stock is considered overvalued, trading at a forward 12-month P/S ratio of approximately 11.35, indicating high growth expectations from investors. The Value Score of F suggests a stretched valuation [7]. Product Innovation Drives Market Position - Despite challenges, Datadog is enhancing its market position through product innovation, having introduced over 400 new features in the past year, including LLM Observability and BizAI for incident management [12][16]. - A partnership with Chainguard aims to improve container security and observability, further strengthening its security offerings [13]. AI and Cloud Growth Potential - Datadog is well-positioned to benefit from the rapid adoption of AI and cloud technologies, with AI-native customers contributing 6% of ARR in Q4 2024, doubling from the previous year [14]. - The launch of new products tailored for AI integration enhances Datadog's appeal in the growing market for AI-driven solutions [16]. Financial Performance and Market Outlook - Datadog's guidance for Q1 2025 projects revenues between $737 million and $741 million, indicating a year-over-year growth of 20-21%. The full-year 2025 outlook suggests revenues between $3.175 billion and $3.195 billion, with non-GAAP EPS expected in the range of $1.65-$1.70 [17]. - The Zacks Consensus Estimate for 2025 revenues is $3.19 billion, reflecting an 18.85% year-over-year improvement, while earnings per share are expected to decrease by 7.14% [18]. Conclusion - Current valuations suggest that investors may benefit from waiting for a better entry point, as Datadog's strong product portfolio and market position are countered by challenges from competition and cost escalations [20]. - Datadog is viewed as a compelling long-term investment candidate, but factors such as cost-conscious spending and the risk of enterprises shifting to in-house solutions could limit growth [21].

Core Viewpoint - Datadog's stock performance has shown a slight increase recently, but it has underperformed compared to the broader market over the past month, with upcoming earnings expected to reflect a decline in EPS but an increase in revenue [1][2]. Company Performance - Datadog closed at $110.58, with a daily increase of 0.37%, outperforming the S&P 500's gain of 0.16% [1]. - Over the past month, Datadog's shares have decreased by 6.25%, compared to a 5.94% loss in the Computer and Technology sector and a 3.59% loss in the S&P 500 [1]. - The upcoming earnings report is anticipated to show an EPS of $0.42, a decline of 4.55% year-over-year, while revenue is expected to reach $739.51 million, reflecting a 20.98% increase [2]. Earnings Estimates - For the full year, earnings are projected at $1.69 per share, representing a decrease of 7.14% from the previous year, while revenue is expected to be $3.19 billion, indicating an increase of 18.85% [3]. - Recent changes in analyst estimates suggest a positive outlook for Datadog's business operations and profitability [4]. Valuation Metrics - Datadog's current Forward P/E ratio is 65.32, significantly higher than the industry average of 28.29 [7]. - The company has a PEG ratio of 7.79, compared to the Internet - Software industry's average PEG ratio of 2.07, indicating a premium valuation relative to expected earnings growth [7]. Industry Context - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 128, placing it in the top 50% of over 250 industries [8]. - Historically, industries in the top 50% outperform those in the bottom half by a factor of 2 to 1 [8].

Core Insights - Chainguard and Datadog have announced a partnership to enhance software supply chain security by integrating container observability with proactive risk mitigation strategies [1][4] - The collaboration aims to provide real-time insights into container risks, enabling engineering and security teams to eliminate vulnerabilities and improve software development velocity [1][5] Group 1: Partnership Overview - The integration combines Chainguard's secure container solutions with Datadog's monitoring capabilities, allowing customers to identify and remediate common vulnerabilities and exploits (CVEs) [1][4] - A new Chainguard dashboard within Datadog will provide a holistic view of container infrastructure and associated CVE risks, facilitating better decision-making for security and engineering teams [3][4] Group 2: Industry Challenges - The World Economic Forum's report indicates that 54% of large organizations view supply chain challenges as the primary barrier to achieving cyber resilience [2] - There is a lack of visibility and accountability between engineering and security teams, leading to increased exposure to supply chain attacks and slower innovation [2] Group 3: Customer Benefits - Joint customers of Chainguard and Datadog will experience reduced risk across their application surface area, transitioning from reactive alerts to proactive risk reduction [5] - The integration allows security teams to prioritize CVE remediation in high-risk containers, enabling engineering teams to focus on shipping secure software more efficiently [5][6]

Group 1 - Datadog Inc. (DDOG) is a significant player in the IT infrastructure management space, valued at approximately $30 billion [1] - The company offers a comprehensive observability and monitoring platform that helps firms manage, optimize, and secure their IT infrastructure [1]

Core Viewpoint - Datadog has experienced a significant decline in stock performance, with a return of -27.4% over the past month, compared to the S&P 500's -9.6% and the Zacks Internet - Software industry's -18.8% [2] Earnings Estimate Revisions - The current quarter's earnings estimate for Datadog is $0.42 per share, reflecting a decrease of -4.6% year-over-year, with a notable change of -23.4% in the consensus estimate over the last 30 days [5] - For the current fiscal year, the consensus earnings estimate is $1.69, indicating a decline of -7.1% from the previous year, with a significant change of -44.8% in the estimate over the last month [5] - The next fiscal year's consensus earnings estimate is $2.08, showing an increase of +23.4% year-over-year, although it has decreased by -12.8% recently [6] Revenue Growth - Datadog's consensus sales estimate for the current quarter is $739.51 million, representing a year-over-year growth of +21% [9] - The sales estimates for the current and next fiscal years are $3.19 billion and $3.79 billion, indicating growth rates of +18.9% and +18.8%, respectively [9] Last Reported Results and Surprise History - In the last reported quarter, Datadog achieved revenues of $737.73 million, a year-over-year increase of +25.1%, with an EPS of $0.49 compared to $0.44 a year ago [10] - The reported revenues exceeded the Zacks Consensus Estimate of $711.65 million by +3.67%, and the EPS surprise was +13.95% [11] - Datadog has consistently beaten consensus EPS and revenue estimates in the last four quarters [11] Valuation - Datadog is currently graded F in the Zacks Value Style Score, indicating it is trading at a premium compared to its peers [15] - Valuation multiples such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) are essential for assessing whether the stock is overvalued, fairly valued, or undervalued [13][14] Bottom Line - The current Zacks Rank of 3 suggests that Datadog may perform in line with the broader market in the near term, despite the recent market buzz [16]

Group 1 - Datadog (NASDAQ: DDOG) has experienced a significant decline since its recent highs in December, indicating potential volatility in the software sector [1] - The management of Datadog provided conservative guidance, reflecting cautious expectations for future performance [1] - The investment strategy discussed emphasizes finding undervalued companies with strong balance sheets and management teams in sectors with long growth potential [1] Group 2 - The leader of the investing group Best Of Breed Growth Stocks focuses on stocks with a high probability of delivering substantial alpha compared to the S&P 500 [1] - The investment approach combines growth-oriented principles with strict valuation criteria to enhance the margin of safety [1] - Features of the investment group include access to high-conviction stock picks, comprehensive research reports, real-time trade alerts, and macro market analysis [1]

Group 1: Market Overview - Analysts on Wall Street unanimously believe certain stocks are undervalued, indicating potential investment opportunities [1][2] - The article highlights three AI stocks that are trading below the lowest price targets set by analysts [3] Group 2: Microsoft - Microsoft is a leader in AI due to its early investment in OpenAI and the ChatGPT application, which has driven growth in its Azure cloud computing platform [4] - Azure's revenue increased by 31% year over year, with AI services growing by 157% in the last quarter, suggesting continued strong growth [5] - The enterprise software segment, boosted by AI features, saw a 15% increase in sales for Microsoft 365 commercial products and Microsoft Dynamics [6] - Microsoft stock trades at approximately 29 times forward earnings, reflecting its strong cash flow and buyback strategy [7] Group 3: Dell Technologies - Dell's revenue is split between PC sales and enterprise solutions, with the latter benefiting significantly from AI, leading to a 54% increase in server sales last year [8][9] - Despite a recent shortfall in AI server sales, Dell's AI server backlog reached $9 billion, doubling from the previous year, indicating strong future growth potential [12] - Dell's forward P/E ratio is just 10, making it an attractive investment despite stagnant client PC business [13] Group 4: DataDog - DataDog provides solutions for unifying data across various platforms, which is increasingly important as businesses adopt AI [14] - The introduction of the LLM Observability product has expanded DataDog's customer base and increased product uptake, contributing to high net dollar-based retention rates [16] - DataDog's stock has a forward P/E ratio of 66, reflecting its potential for over 20% annual revenue growth and margin improvement [18]

Core Viewpoint - Datadog's stock has experienced a significant decline of -18.3% over the past month, underperforming compared to the S&P 500's -1.3% and the Zacks Internet - Software industry's -6.2% [1] Earnings Estimate Revisions - Datadog is expected to report earnings of $0.42 per share for the current quarter, reflecting a year-over-year decrease of -4.6% and a 30-day estimate change of -21.8% [4] - For the current fiscal year, the consensus earnings estimate is $1.70, indicating a -6.6% change from the previous year, with a 30-day estimate change of -40.8% [4] - The next fiscal year's consensus earnings estimate of $2.11 suggests a +23.7% increase from the prior year, although it has changed -11.8% in the past month [5] Revenue Growth Forecast - The consensus sales estimate for Datadog is $739.51 million for the current quarter, representing a year-over-year growth of +21% [8] - For the current and next fiscal years, the sales estimates are $3.19 billion and $3.79 billion, both indicating a growth of +18.9% [8] Last Reported Results and Surprise History - Datadog reported revenues of $737.73 million in the last quarter, a year-over-year increase of +25.1%, with an EPS of $0.49 compared to $0.44 a year ago [9] - The reported revenues exceeded the Zacks Consensus Estimate of $711.65 million by +3.67%, and the EPS surprise was +13.95% [10] - The company has consistently beaten consensus EPS and revenue estimates over the last four quarters [10] Valuation - Datadog is graded F in the Zacks Value Style Score, indicating it is trading at a premium compared to its peers [14]