Industry Overview - The artificial intelligence (AI) boom is creating new opportunities for companies of all sizes, with a focus on those participating in the AI race as they have been a key source of stock market returns in recent years [1] Company: Datadog - Datadog is experiencing high demand for its AI products, which are integrated into its cloud observability technologies that help businesses manage digital infrastructure [3] - The company has launched an AI assistant called Bits AI to enhance workflows and new AI products like LLM Observability to assist developers in tracking costs and troubleshooting issues with large language models [4] - Datadog serves customers who adopt third-party AI models with its OpenAI Monitoring product, which tracks usage, costs, error rates, and response times [5] - As of the end of Q3 2025, Datadog had 32,000 customers, with over 5,000 using AI products, marking a 67% increase year-over-year; AI customers contributed 12% of the company's $881 million total revenue, doubling from 6% the previous year [7] - Datadog's stock is down 31% from its 52-week high, but the upcoming earnings report on February 10 could indicate continued growth in AI customer count and revenue [8] Company: Workiva - Workiva's platform aggregates data from various digital applications, simplifying the reporting process for large organizations [9] - The company launched an AI assistant that helps create reports by turning simple prompts into detailed content, enhancing the reporting experience [10] - The AI assistant is designed to understand context by familiarizing itself with documents within the Workiva platform, making it accessible throughout the ecosystem [11] - Workiva's revenue grew by 21% to $224 million in Q3 2025, driven by an increase in high-spending customers, with businesses spending at least $300,000 and $500,000 annually growing by 41% and 42% respectively [13] - Following a strong Q3 report, Workiva raised its full-year revenue forecast for 2025 to $881 million, with expectations for stock performance to improve if the forecast is exceeded [14]

Core Insights - Datadog's stock has reached an all-time high, driven by the increasing demand for AI tools and services, which aligns with Ark Investment Management's forecast of a $13 trillion opportunity in the software industry by 2030 [1][3][18] Company Overview - Datadog offers a comprehensive portfolio of software and AI development tools, which are essential for developers, particularly in the context of AI software development [3][4] - The company's cloud observability platform is utilized across various industries, providing real-time monitoring of digital infrastructure to prevent customer experience disruptions [4][5] AI Product Demand - Datadog has introduced AI-specific products such as LLM Observability and OpenAI Monitoring, which help developers manage costs and technical issues when building large language models [6][7] - The number of customers using Datadog's AI products has surged by 67% year-over-year, indicating strong demand and growth potential in this segment [8][9] Financial Performance - In Q3 2025, Datadog reported total revenue of $886 million, a 28% increase from the previous year, with AI products contributing significantly to this growth [10][11] - AI-native customers accounted for 12% of total revenue, doubling from 6% a year ago, showcasing the accelerating revenue growth in this area [11] Future Projections - Following strong financial results, Datadog has raised its revenue forecast for 2025 to $3.39 billion, nearly $200 million higher than initial estimates [12] - Analysts are generally bullish on Datadog's stock, with a consensus price target suggesting an 8% potential increase over the next 12 to 18 months, although the stock is currently trading at a premium [13][15] Market Position - Datadog's price-to-sales ratio is currently at 22.4, which is 33% higher than its three-year average, indicating potential limitations for further upside in the near term [15][17] - The demand for cloud observability tools and AI monitoring is expected to grow significantly, positioning Datadog favorably in a market projected to expand dramatically by 2030 [18]

Core Insights - Datadog is well-positioned to benefit from the increasing adoption of AI software by businesses, as highlighted by Ark Investment Management's predictions about the AI market [1][3][18] - The AI revolution is projected to create a $13 trillion opportunity in the software space by 2030, driven by advancements in AI coding assistants [2] Company Overview - Datadog offers a cloud observability platform that monitors digital infrastructure, providing businesses with real-time alerts on technical issues [5][6] - The company serves a diverse range of industries, including entertainment, gaming, manufacturing, and financial services, many of which are deploying AI software [7] AI Product Portfolio - Datadog has developed AI tools such as OpenAI Monitoring, which tracks AI usage, costs, and error rates, and LLM Observability, which helps businesses monitor their own large language models [8][9] - The number of Datadog customers using AI products increased by 80% year-over-year, reaching 4,500 [10] Financial Performance - Datadog generated $2.68 billion in total revenue in 2024 and is projected to reach $3.31 billion in 2025, with AI-native customers contributing 11% of total revenue, up from 4% a year ago [11][12] - Operating costs rose to $1.3 billion in the first half of 2025, a 30% increase from the previous year, while GAAP profit declined by 68% to $27.2 million [13][14] Valuation and Investment Potential - Datadog's price-to-sales (P/S) ratio is currently at 16.3, down from a peak of over 60 in 2021, indicating a more reasonable valuation [15][16] - Long-term investors may find Datadog's stock attractive due to the anticipated surge in demand for its AI products, especially if Ark's market predictions hold true [18]

Core Insights - Datadog is successfully transitioning into the artificial intelligence (AI) sector, leveraging its cloud observability platform to monitor digital infrastructure and now AI models [1][2][5] Company Overview - Datadog had approximately 30,500 customers by the end of Q1 2025, operating across various industries such as retail, financial services, manufacturing, and entertainment [5] - The company aims to assist businesses in managing AI technology effectively, similar to how it manages cloud infrastructure [5] AI Product Development - Datadog launched LLM Observability, a monitoring tool for large language models (LLMs), which helps developers identify technical bugs, track costs, and evaluate output accuracy [6] - Another product, OpenAI Monitoring, was created for businesses utilizing LLMs from OpenAI, allowing them to monitor usage, costs, and error rates [7] Customer Adoption and Revenue Growth - By the end of Q1 2025, 4,000 customers were using Datadog's AI products, a significant increase from the previous year [8] - Datadog reported $762 million in total revenue for Q1 2025, exceeding forecasts, with AI-native customers contributing 8.5% of total revenue, up from 3.5% year-over-year [9][10] Future Expectations - Investors are anticipating an update on AI revenue figures during the upcoming earnings report on August 7, which could indicate AI's contribution surpassing 10% of total revenue [10] - Following strong Q1 results, Datadog raised its full-year guidance for 2025 from $3.185 billion to $3.225 billion, suggesting continued momentum in AI revenue [11] Stock Performance and Valuation - Datadog's stock has gained 27% over the past year but is trading below its 2021 peak, reflecting a recovery trajectory [12] - The stock currently has a price-to-sales (P/S) ratio of 19, indicating a higher valuation compared to other cloud and AI software stocks [13] - While short-term gains may be uncertain, long-term investors could benefit from the growth of Datadog's AI business [15]