The S&P 500 (^GSPC 0.06%) is down 6% in 2025 amid rising global trade tensions, triggered by the sweeping tariffs President Donald Trump enacted on imported goods from America's trading partners. But throughout history, the stock market has always recovered to new highs even after the most brutal economic shocks -- from the Great Depression to the COVID-19 pandemic -- so the recent dip could be a great opportunity for investors to put some money to work. Rising trade tensions can impact all companies if the ...

Core Viewpoint - The Nasdaq Composite index has experienced significant fluctuations, with a 28% increase in 2024 driven by AI stocks, but is currently down 12% from its December peak, indicating a correction phase that may present buying opportunities for investors [1][2]. Company Overview - Datadog has developed a cloud platform for monitoring digital infrastructure and is expanding into the AI sector, with its stock down 45% from its all-time high during the tech boom in 2021 [2][3]. - The company has a diverse customer base, including major players like Sony, which utilizes Datadog's platform to manage its global operations effectively [4]. AI Expansion - Datadog launched an observability tool for large language models (LLMs) to assist developers in troubleshooting and managing costs, which is becoming increasingly vital as LLMs grow in complexity [6][7]. - As of the end of 2024, Datadog had 30,000 customers, with 3,500 using at least one AI product, marking a 75% increase from the beginning of the year [8]. Financial Performance - Datadog reported a record total revenue of $2.68 billion in 2024, a 26% increase year-over-year, surpassing its forecast [9]. - AI-related revenue accounted for 6% of total revenue in Q4 2024, doubling from 3% in Q4 2023, indicating strong growth potential in this segment [10]. - The company managed to grow operating expenses by only 20%, leading to a 278% increase in GAAP net income to $183.7 million for the year [11]. Valuation and Analyst Sentiment - Datadog's stock trades at a price-to-sales (P/S) ratio of 13.9, which is a 51% discount to its long-term average of 28.7, suggesting potential for upside [13][14]. - Analysts are overwhelmingly bullish, with 30 out of 47 assigning the highest buy rating, and an average price target of $161.74, indicating a potential upside of 54% [15]. Market Trends - The increasing adoption of AI across organizations suggests a growing demand for Datadog's observability tools, which could lead to significant revenue contributions from its AI business in the future [16].