We recently published a list of 10 Best Growth Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Datadog, Inc. (NASDAQ:DDOG) stands against other best growth stocks to buy according to billionaires.
Can the Stock Market Have a Big Rebound?
The stock market has been on a rollercoaster ride for the past few weeks as the sentiment has quickly shifted from post-election bullishness to being priced in for a slow-down or a recession. The volatility can be estimated by the 19% decrease in the S&P 500 from its recent all-time high. To talk about the current market volatility and the way forward, Fundstrat’s Tom Lee joined CNBC for an interview. He noted that the market is currently pessimistic as recent data shows that they have priced in a 60% probability of a recession, however, it is essential to note that if the tariff situation de-escalates then the probability of a recession isn’t that high. As a result, Lee thinks that there is a big window of opportunity for stocks to rebound, however, this rebound is contingent on the path of tariff de-escalation.
While addressing the concerns that if the market is in a bear market, Lee noted that if we define a bear market by stocks grinding and losing money, then this has been happening since December 2024. However, if you define a bear market as unleashing a type of financial tightening that leads to a recession, the current market does not fit that criteria. Lee acknowledged that it does feel like a bear market for an average person.
Lee also talked about the viable investor strategy under the current circumstances. Firstly, he highlighted that people are fighting two brains at the moment, one is a tactical brain, where people want to know if this is the bottom and be convinced by seeing the stocks rally on bad news. On the other hand, there is the investor or the long-term brain, which suggests that people should have confidence in the US companies to navigate this volatility. Lee noted that he is a buyer of this volatility as he thinks that the de-escalation of tariffs will take place, which will result in a big rebound for stocks.
Our Methodology
To compile a list of the 10 best growth stocks to buy according to billionaires, we used the Finviz stock screener, Seeking Alpha, and Insider Monkey’s Billionaire database. Using the screener we aggregated a list of growth stocks that have grown their top-line by more than 30% over the past 3 years and sorted them by market cap. Next, we cross-checked each stock’s sales growth from Seeking Alpha and ranked the stocks in ascending order of the number of billionaire investors. Please note that we have also included the hedge funds sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a laptop with a software engineer coding on the monitor.
Datadog, Inc. (NASDAQ:DDOG)
3-Years Sales Growth: 37.67%
Number of Hedge Fund Holders: 83
Number of Billionaires: 17
Value of Billionaire Holdings: $765,542,290
Datadog, Inc. (NASDAQ:DDOG) is an international provider of security and observability solutions. Its key offerings include Infrastructure Monitoring, Application Performance Monitoring, Log Management, Cloud Security, and more. Its services allow enterprises to improve their performance and optimize costs for their technologies.
On April 7, Jefferies analyst Brent Thill maintained a Buy rating on the stock with a price target of $135. During the fiscal fourth quarter of 2024, Datadog, Inc. (NASDAQ:DDOG) reported growing its revenue by 25% year-over-year to reach $738 million. The growth was driven by an increase in large customers with more than 462, $1 million ARR customers. In addition, Parnassus Growth Equity Fund mentioned adding Datadog, Inc. (NASDAQ:DDOG) in its Q4 2024 investor letter. The fund stated that the company is a dominant cloud monitoring platform with best-in-class products and a sticky product suite. The fund believes that the market has misinterpreted the cyclical headwinds such as a drop in IT spending, whereas the company has been benefiting from growth in its Cloud infrastructure monitoring platforms. It is one of the best growth stocks to buy according to billionaires.
Parnassus Growth Equity Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its Q4 2024 investor letter:
“We also added several new positions, including two in Information Technology: Atlassian, a maker of innovative software that allows IT developers and other employees to seamlessly collaborate on complex projects, and Datadog, Inc. (NASDAQ:DDOG), a dominant cloud monitoring platform.
Datadog, a dominant cloud monitoring platform, should have outsized growth due to its category leadership, sticky product suite, best-in-class product innovation and highly regarded management team. We believe the market has misinterpreted cyclical headwinds, such as reductions in IT spending, as secular trends, and we see Datadog benefiting from growth in Cloud Infrastructure-as-a-Service.”
Overall, DDOG ranks 4th on our list of best growth stocks to buy according to billionaires. While we acknowledge the potential of DDOG to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DDOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
