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AI Software Sales Could Soar 1,080%: 2 Brilliant AI Stocks to Buy Now That Come Highly Rated by Wall Street
DDOGDatadog(DDOG) The Motley Fool·2024-10-18 07:33

Artificial Intelligence Software Growth - Artificial intelligence software sales are projected to grow from 1.1trillionto1.1 trillion to 13 trillion by 2030, implying an annual growth rate of nearly 50% and a total increase of 1,080% by the end of the decade [1] Datadog Overview - Datadog provides observability software with nearly two dozen applications that help businesses monitor, analyze, and troubleshoot IT infrastructure performance issues [2] - The company's AI engine, Watchdog, detects anomalies, surfaces insights, and automates root cause analysis to expedite incident resolution [2] - Datadog has been recognized as a leader in observability platforms by Gartner for four consecutive years and has a strong presence in cloud infrastructure monitoring, log monitoring, and server monitoring [2] Datadog Financial Performance - Datadog's Q2 revenue increased 27% to 645million,withnon−GAAPearningsjumping48645 million, with non-GAAP earnings jumping 48% to 0.43 per diluted share [3] - The company saw a 10% increase in customers and a mid-teens increase in spend per existing customer [3] - Management raised full-year guidance, forecasting a 23% revenue increase in 2024 [3] Datadog Market Opportunity - Datadog's robust portfolio creates cross-sell opportunities and appeals to businesses seeking comprehensive platforms [3] - The company's LLM Observability product addresses the growing demand for AI software, particularly for large language models and generative AI applications [3] - Datadog has tapped less than 5% of its 51billionaddressablemarket,indicatingsignificantgrowthpotential[4]ServiceNowOverview−ServiceNowprovidessoftwarethatdigitizesbusinessprocessesacrossIT,customerworkflows,employeeworkflows,creatorworkflows,andfinanceandsupplychainworkflows[5]−ThecompanyhasintegratedAIintoitssoftwareforyears,includingpredictiveintelligence,AIsearch,andvirtualagents[5]−ServiceNowrecentlylaunchedNowAssist,asuiteofgenerativeAItoolsthatsummarizeinformationanddrafttext[5]ServiceNowMarketLeadership−ServiceNowisthemarketleaderinITservicemanagement,ITassetmanagement,andAIforIToperationssoftware[6]−Thecompanyisalsorecognizedforitsleadershipinmulticloudandhybridcloudmanagement,digitalprocessautomation,andcustomerservicesolutions[6]−RecentinvestmentsingenerativeAIandpartnershipswithNvidiaareexpectedtokeepServiceNowattheforefrontofinnovation[6]ServiceNowFinancialPerformance−ServiceNow′sQ2revenueincreased2251 billion addressable market, indicating significant growth potential [4] ServiceNow Overview - ServiceNow provides software that digitizes business processes across IT, customer workflows, employee workflows, creator workflows, and finance and supply chain workflows [5] - The company has integrated AI into its software for years, including predictive intelligence, AI search, and virtual agents [5] - ServiceNow recently launched Now Assist, a suite of generative AI tools that summarize information and draft text [5] ServiceNow Market Leadership - ServiceNow is the market leader in IT service management, IT asset management, and AI for IT operations software [6] - The company is also recognized for its leadership in multicloud and hybrid cloud management, digital process automation, and customer service solutions [6] - Recent investments in generative AI and partnerships with Nvidia are expected to keep ServiceNow at the forefront of innovation [6] ServiceNow Financial Performance - ServiceNow's Q2 revenue increased 22% to 2.6 billion, driven in part by momentum with generative AI products [6] - Non-GAAP net income increased 32% to 3.13perdilutedshare,witharenewalrateof983.13 per diluted share, with a renewal rate of 98% and a 31% jump in remaining performance obligation [6] ServiceNow Growth Prospects - Wall Street expects ServiceNow's adjusted earnings to grow at 20% annually through 2025 [7] - The company's addressable market is projected to reach 275 billion by 2026, and Now Assist is described as the fastest-growing new product in its history [7]