1 Super Stock Down 32% to Buy Hand Over Fist in August, According to Wall Street

Core Insights - Artificial intelligence is significantly contributing to Datadog's revenue growth, particularly through new AI tools launched in the past year [1][2] - Datadog's stock is currently trading 32% below its peak in 2021, but analysts remain optimistic, with 31 out of 46 rating it a buy [3][10] - The company reported a 28% year-over-year revenue increase in Q2 2025, driven by a substantial rise in AI-native customers [7][8] Revenue and Growth - Datadog generated $827 million in total revenue during Q2 2025, exceeding management's guidance by $36 million [7] - AI-native customers contributed 11% to Q2 revenue, up from 4% in the previous year, indicating strong adoption of AI products [7][8] - The company raised its 2025 revenue forecast by $92 million to $3.317 billion at the midpoint of its guidance range [8] Customer Base and Product Adoption - Datadog had approximately 31,400 customers at the end of Q2 2025, an 8% increase year-over-year, with 4,500 customers using at least one AI product, marking an 80% increase [4][5] - The LLM Observability product helps developers manage costs and technical issues related to large language models, which are essential for AI applications [5][6] Financial Performance - Adjusted net income grew by 7% year-over-year to $163.8 million, while operating costs surged by 36%, primarily due to increased R&D spending [8] - The decline in stock price has led to a P/S ratio of 15.6, which is a 10% discount to its three-year average [12] Analyst Sentiment - The average price target for Datadog stock is $163.66, suggesting a potential upside of 25% over the next 12 to 18 months, with a high target of $230 indicating a possible return of 75% [11][12] - Analysts are generally bullish on Datadog's prospects, with a majority recommending a buy or overweight rating [10]