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3. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 71

Datadog, Inc. (NASDAQ:DDOG) is a software infrastructure company that operates an observability and security platform for cloud applications. On January 28th, analysts at Stifel downgraded the stock from a buy to a hold and cut the price target to $140 from $165. The downgrade comes amid expectations that the company will experience slower revenue growth and margin pressures in 2025. In contrast, the company has been serving solid sales growth numbers, with revenues climbing 26% yearly in the third quarter amid strong demand for AI-enhanced cybersecurity products.

Additionally, Datadog, Inc. (NASDAQ:DDOG) is well-positioned to continue experiencing strong demand for its AI-powered cloud monitoring and security solutions. Market.us, a market research firm, projects that through 2033, the use of AI in the observability space will grow at a compound annual rate of 22.5% to boost its growth. Datadog has been establishing itself in the cloud observability market by incorporating AI into its products.