DDOG - Datadog: Growth Triad Still Holds Strong AI Expansion TAM And Profitability

2024-06-15 00:09:25 ET

Summary

• AI has been a hot topic in earnings calls, but companies like Salesforce, MongoDB, and UiPath have yet to see significant results.
• Datadog is integrating AI into its cloud platform, with AI products contributing 3.5% to ARR. With its slate of AI-focused products, there is significant room for expansion.
• Despite strong fundamentals and outlook, Datadog appears fully priced, leading to a Hold rating with potential for future upside based on AI integration and operating leverage.

Investment Thesis

AI has been the coolest thing to talk about during conference calls through last year as companies vie for investor attention and capital in one of the hottest phases of technology in the longest time. According to FactSet, AI was discussed at least 177 times across earnings calls, reaching its peak in 2023 during Q2 last year. This year created a new record as companies discussed AI almost 200 times across conference calls, according to FactSet....

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