Kim Bolton Datadog, Inc. DDOG-Q TOP PICK Aug 14, 2023

DDOG is a monitoring and analytics platform used by companies to keep track of their applications and systems. It helps businesses understand how their software applications are performing in real-time. Datadog collects data from various sources like servers, databases, cloud services, and applications, then analyzes and visualizes this data to provide insights into performance, availability, and security. The software that DDOG sells can be broadly classified as 'observability software.' DDOG has significantly integrated AI into it's product offering and this alone is fuelling it's current and future growth. We think that DDOG has significant room to grow on the back of AI tailwinds and forecasts are calling for 20%+ revenue growth over the next three years. 
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Pricey at 74x PE. Doesn't have a heck of a lot of competition. The whole AI ecosystem is so competitive. DDOG continues to have robust R&D that keeps it ahead. Pick up in thirds here at $126, $115, and just shy of $108-109.

EPS was 44c vs estimates of 35c; revenue of $611M beat estimates of $590.7M. Datadog's better-than-expected 1Q revenue momentum is positive, and as the company garners additional share from rivals sidetracked by M&A, prospects for upward revenue revisions can't be overlooked. The signs of improving workloads witnessed in April, a multi-product push, growing AI workloads and large-enterprise customer focus could continue to fuel Datadog's revenue growth. Rising investments into sales and marketing initiatives may provide further impetus. The re-accelerating cloud revenue growth reported by hyperscalers in the recent quarter should also be constructive for observability vendors. The stock slipped on the earnings, but it is up 49% in a year. The concern was likely more due to the president stepping down and a less-than-perfect forecast. But we would still see it as an accumulate (buy over time, but with no rush). 
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Wait for Salesforce's report tomorrow before making a move with this.

He just bought Datadog, because something exciting is unfolding in software. Software is bottoming. DDOG participates in the crucial area of AI, security, using cloud-based monitoring, which is important to enterprise. It's breaking out now around $130 today.

Commercial software is too crowded a space, so he doesn't trust this yet. The company itself is good, though.

12-month price target of $248. Hold if you own. If you want to get in, buy in thirds here ~$113, $108, and $103.

Traditionally, company has had very high valuation. Technology is strong, but difficult to justify investment at this time. Cloud technology not going away, and demand will continue to rise. Business model also allows for steady revenues. Good for long term investors, not good for short term investors. 

He doesn't like enterprise software which ebbs and flows, and now this space is flowing. Also, there's takeover talk of this name.

Trims every once in a while. 12-month price target of $148. Like the lifeguard in the cloud pool, makes sure everyone plays well together. Hyperscalers love these guys, because the hyperscalers don't have to worry about the hardware and software not being compatible. No dividend.