We recently compiled a list of the 12 Best Big Data Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Datadog, Inc. (NASDAQ:DDOG) stands against the other big data stocks.
Big data refers to large and diverse collections of data that cannot be managed by traditional data processing tools. Although the need to manage large data sets goes back to the 1960s and 1970s, it was around 2005 when open-source frameworks were created to store and analyze big data sets. Then, the Internet of Things (IoT) enabled gathering more data on product performance and customer usage patterns with more devices connected to the Internet. With the current expansion of generative AI and cloud computing enterprise use, big data continues to grow.
According to a report by Research and Markets, the big data market is projected to grow from $220.2 billion in 2023 to $401.2 billion by 2028, at a compound annual growth rate of 12.7% during the forecast period. Region-wise, North America holds the largest market share, driven by early adoption of big data solutions, a mature IT infrastructure, and a strong focus on innovation. Simultaneously, Asia Pacific serves as the fastest-growing segment in the market as a result of rapid digitization, proactive government support for technological advancements, and growing internet connectivity.
Big data offers numerous benefits such as enhancing predictive capabilities, better insights, strategic decision-making, personalized customer experiences, and improved operational efficiency. The use cases for big data are diverse spanning various industries including retail and ecommerce, healthcare, financial services, manufacturing, as well as government and public services. For instance, the e-commerce giant Amazon utilizes big data gathered from customers to fine-tune its recommendation engine to recommend products to customers who tend to feel overwhelmed by the variety of choices available to them in the modern era. Such suggestions tend to drive impulsive purchases.
Simultaneously, the biotech leader AstraZeneca has unlocked the potential of data and AI-driven drug discovery and development. The firm claimed to hold a vast trove of oncology data from numerous consenting patients, including clinical, imaging, and multi-omics data. This data is fed by the firm’s Oncology Data Science team into a system that uses AI and other statistical tools to generate novel hypotheses in oncology drug development. Other than data from its clinical trials, the firm also collaborates with external companies to leverage real-world data that represents patients from across the globe.
Our Methodology:
In order to compile a list of the 12 best big data stocks to buy according to hedge funds, we went through relevant ETFs and media reports to make a list of big data stocks. Moving on, we shortlisted the top 12 stocks from our list which had the highest number of hedge fund holders. The 12 best big data stocks to buy according to hedge funds have been arranged in ascending order of their hedge fund holders, as of Q3.
At Insider Monkey we are obsessed with 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).
A close-up of a laptop with a software engineer coding on the monitor.
Datadog, Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders: 71
Datadog, Inc. (NASDAQ:DDOG) serves as the observability and security platform for cloud applications. The company’s SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, real-user monitoring, log management, and other capabilities to offer unified, real-time observability and security for its customers’ entire technology stack. Datadog caters to organizations of all sizes and across various industries.
The firm set out in 2010 to build a real-time data integration platform to turn the chaos of having uncorrelated data from disparate sources into digestible and actionable insights. Datadog solves complexity by offering a unified platform for breaking down silos, which is deployed everywhere and used by everyone. The firm’s ability to capture market share is evident from the fact that the number of monthly active users has grown from 2017 to 2023 where monthly active users are users at paying customers, who logged onto the Datadog platform in December of the given year.
The company’s third quarter went well with revenue growing 26% year-over-year to $690 million. As of September 3, Datadog had about 3,490 customers with ARR of $100,000 or more, an increase of 12% year-over-year. The firm also reported an achievement as it was named a Leader in the 2024 Gartner Magic Quadrant for Observability Platforms and the 2024 Gartner Magic Quadrant for Digital Experience Monitoring.
The growth opportunities for Datadog, Inc. (NASDAQ:DDOG) remain vast with the secular tailwind of digital transformation and cloud migration. The Cloud market is a $560 billion market as of now, growing at a 20% CAGR through 2027. The observability market and the Cloud Security market are to expand over the years as well.
Overall DDOG ranks 4th on our list of the best big data stocks to buy according to hedge funds. While we acknowledge the potential of DDOG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.