We recently published a list of 10 Best Predictive Analytics Stocks to Invest in Now. In this article, we are going to take a look at where Datadog, Inc. (NASDAQ:DDOG) stands against other predictive analytics stocks to invest in now.
Data is at the forefront of many inventions today and is the primary ingredient of innovation. Of the many branches of data usage, predictive analytics is garnering immense traction, especially with the advent of artificial intelligence. Predictive analytics is the use of data, statistics, modeling, and machine learning to forecast, predict, and plan future events. There are different types of predictive analytics including regression analysis, time-series analysis, and machine learning algorithms.
According to a report by Fortune Business Insights, the global predictive analytics market was valued at $14.71 billion in 2023. The global predictive analytics market is expected to grow to $95.3 billion by 2032 from $18.02 billion in 2024 at a compound annual growth rate (CAGR) of 23.1%. The report attributes the growth in the industry to the growing investments in data by the government and large corporations followed by IoT and AI integrations. The use of predictive analytics is bifurcated into multiple segments including life sciences, automotive, retail, energy, telecom, and healthcare, to name a few.
Startups Disrupting the Predictive Analytics Space
There are a range of startups in the predictive analytics space that are revolutionizing the industry. One such name is Pecan AI. The automated predictive analytics platform is developed and designed intricately to meet the needs of data scientists. Data scientists can use the platform to build powerful predictive AI capabilities and machine learning models that drive business impact. Data scientists do not need coding or data science skills to make use of the platform. The platform is used by a range of companies including Johnson & Johnson, SciPlay, Hydrant, Kenvue, Proper Cloth, and DME Acquire. Earlier in January, the company introduced predictive generative AI to transform enterprises. Pecan AI also has partnerships with some of the largest tech corporations and platforms including Azure and AWS.
DataRobot is another leader in the predictive analytics industry that delivers revolutionary AI use cases for businesses. Its AI platform consists of core AI features such as generative AI, predictive AI, AI governance, AI observability, and AI foundation. The platform promises 83% faster deployment and secures nearly 1.4 billion predictions every day. Users can run models in minutes by skipping manual data preparation and cleaning. Additionally, the platform eliminates the need for repetitive coding, by streamlining feature discovery and defining elements of datasets automatically. Users can connect data from warehouses such as AWS and Azure into a singular workspace. Some of the predictive use cases facilitated by DataRobot include time series modeling, clustering and seasonality, cold start forecasting, nowcasting, and anomaly detection.
Now that we have studied the predictive analytics industry and some revolutionary startups, let’s take a look at the 10 best predictive analytics stocks to invest in now.
Our Methodology
To come up with the 10 best predictive analytics stocks to invest in now we went through multiple reports on the internet, ETFs, and stock screeners. We then examined the analyst upside of each stock and ranked the ones with the highest percentage. Our list is in ascending order of the analyst upside as of November 11, 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Datadog, Inc. (NASDAQ:DDOG)
Analyst upside as of November 11, 2024: 24%
Datadog, Inc. (NASDAQ:DDOG) is a software company that offers an observability platform for developers. The platform helps developers build, test, monitor, optimize, and secure their software. Some of its notable customers include Samsung, Peloton, HashiCorp, and 21st Century Fox.
Datadog, Inc. (NASDAQ:DDOG) introduced metric forecasts for predictive monitoring in Datadog in 2017, evidence that the company’s interventions within this industry are not recent. In early 2023, the company launched an integration in the Datadog platform. InsightFinder is a platform that leverages AI-backed predictive analytics to forecast incidents. The integration helped users find problems in the data swiftly and prevent production outages.
Fast forward to 2024, the company is leveraging machine learning to recognize anomalies, forecast to prevent bottlenecks, detect outliers, and identify root causes. In 2024, Datadog, Inc. (NASDAQ:DDOG) was recognized as a leader in digital experience monitoring and observability in the 2024 Gartner Magic Quadrant. DDOG’s digital experience platform encompasses monitoring and testing, product analytics, session replay, and real user monitoring.
Overall, the company grew its revenue by 26% year-over-year in the third quarter of 2024. Its CEO takes pride in its platform which helps customers observe and secure their mission-critical cloud applications while also being able to forecast events and manage operations. This explains why analysts are bullish on the stock. Their median price target of $152 represents an upside of 24% from current levels, as of November 11.
Baron Opportunity Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its Q2 2024 investor letter:
“In our view, the enterprise software winners will have to be better at delivering AI services and features than build-your-own AI tools, and they will have to use their incumbency or leadership advantages to ward off upstarts. We believe the winners will be the ones that have a well-established product development culture of innovation and iteration; differentiated proprietary, industry, and customer data; distribution advantages with large customer bases, successful go-to-market efforts, and key partners; well-designed workflows where AI improves the user interface, intelligent predictions/recommendations, and automation; and established always-on connectivity and feedback from their customers; among other things.
Here are a few examples of our software investments that we believe are AI winners: Datadog, Inc. (NASDAQ:DDOG), a cloud observability platform that the leading LLM providers are using today to monitor their AI apps; these AI customers are already driving nearly $100 million of annual recurring revenue for Datadog already.”
Overall, DDOG ranks 2nd on our list of best predictive analytics stocks to invest in now. While we acknowledge the potential of DDOG to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
