AI Stocks Outlook: Datadog and Confluent Strive for Recovery

AI stocks such as Datadog and Confluent face volatility as investors react to macroeconomic factors and changing market conditions. Yet, significant growth potential remains as AI adoption expands. These companies may represent key opportunities for investors looking towards 2025 and beyond.

Date: 29-05-2025

AI Rating: 7

The report highlights the current state of AI stocks, especially focusing on Datadog (NASDAQ: DDOG) and Confluent (NASDAQ: CFLT). Both companies are positioned to benefit from ongoing AI adoption, but face macroeconomic uncertainties. Datadog has reported a notable increase in customer interest for its AI solutions, doubling its AI integration usage year-over-year, which is likely a positive indicator of growing demand. They have also raised their full-year forecast, suggesting an optimistic outlook for revenue growth. Given Datadog's strong involvement in next-gen AI observability and its role in monitoring large language models, its revenue growth could be expected to further accelerate. On the other hand, Confluent, though experiencing a 19% decline in stock value recently, reported positive earnings growth despite macroeconomic headwinds. The company anticipates a revenue growth rate of 19% to 20%, which reflects a somewhat cautious but stable outlook. Their focus on enhancing real-time data accessibility for AI applications positions them favorably amidst current market trends. Furthermore, their increasing customer base and solid retention rates could potentially drive better performance against current guidance. **Earnings, Revenue, and Growth Insights** Datadog has indicated that AI-specific services have contributed significantly to its revenue growth, underlining a robust demand for their services that could see stock prices rise if expectations are exceeded. Confluent is predicted to showcase an acceleration in earnings growth from 24% in 2025 to 31% in 2026, which also offers a promising prospect for their stock valuation in the near term. Both stocks are affected by the broader market sentiment about AI and economic uncertainties, yet they are strategically placed to capitalize on future demand for AI solutions, making them viable options for investors looking for growth in the technology sector. Given their respective trajectories, investors may find solid entry points into these stocks if the market sentiment shifts favorably as AI adoption continues to expand.

Stocks: DDOG CFLT