DDOG - Better Growth Stock: Snowflake vs. Datadog

2023-08-27 09:11:00 ET

Snowflake (NYSE: SNOW) and Datadog (NASDAQ: DDOG) are both hypergrowth cloud companies that simplify complicated tasks. Snowflake pulls all of a company's data from different computing platforms into a centralized data warehouse where it can be easily accessed by third-party applications. Datadog collects real-time diagnostic data across a company's entire software infrastructure and then aggregates that information onto unified dashboards to help IT professionals spot potential problems.

I previously compared these two companies near the apex of the growth stock rally in late 2021 and concluded that Datadog's milder slowdown, higher adjusted profits, and lower valuation made it a safer bet than Snowflake. Unfortunately, neither stock survived the subsequent meltdown in hypergrowth stocks as the macro headwinds intensified and interest rates rose. After I made that call, Datadog's stock declined 46%, and Snowflake's stock dropped 56%.

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