The tech-focused Nasdaq-100 is known for housing some of the most innovative and fastest-growing companies. As of mid-May, many stocks in this index have shown positive movement year to date. However, certain stocks continue to offer attractive long-term growth prospects and are trading at a significant discount from their recent highs. Notable among these are Datadog and The Trade Desk, both of which have recently experienced price fluctuations but show promising potential.
Datadog’s Growth Amidst Economic Concerns
Datadog, a company specializing in software for monitoring information technology systems, has seen its shares fall by 17% year to date. Despite this, the demand for Datadog’s AI monitoring tools remains strong, driven by the increasing adoption of cloud computing and artificial intelligence. This demand positions Datadog for substantial growth as more companies invest in AI technologies.
Earlier this year, concerns over potential economic recession and tariffs impacted Datadog’s stock. However, the company’s first-quarter report provided a more optimistic outlook. Datadog reported a 25% year-over-year revenue increase to $762 million in Q1, alleviating fears about the impact of economic pressures on software spending.
Key Data Points for Datadog
– NASDAQ: DDOG
– Current Price: $117.59
– Market Cap: $41B
– 52-Week Range: $81.63 – $170.08
– Gross Margin: 80.11%
Datadog’s competitive advantage lies in its cloud-agnostic position, allowing it to serve businesses utilizing multiple cloud services. This flexibility is crucial for companies that prefer not to rely on a single technology provider. Datadog signed 11 deals in the quarter, each with a contract value of at least $10 million, highlighting the importance of its software to large enterprises.
The Trade Desk’s Position in the Digital Ad Market
The Trade Desk, a leading digital ad-buying platform, has also faced challenges, with its shares down by 34.5% year to date. Despite this, the platform continues to attract advertisers looking to invest in digital ads outside of major platforms like Google Search.
The stock’s earlier decline was partly due to financial results that fell short of Wall Street’s expectations for Q4 2024 and its previously high valuation. However, the company’s recent first-quarter results showed a 25% revenue growth year over year, suggesting a healthy ad spending environment.
Key Data Points for The Trade Desk
– NASDAQ: TTD
– Current Price: $76.32
– Market Cap: $38B
– 52-Week Range: $42.96 – $141.53
– Gross Margin: 80.11%
The Trade Desk is gaining traction with its Unified ID 2.0, a system that replaces third-party cookies with a unique identifier, helping advertisers measure ad performance without infringing on user privacy. The company is also migrating clients to its AI-powered Kokai platform, expected to enhance returns on ad spending.
Investment Considerations
For investors, both Datadog and The Trade Desk present intriguing opportunities. Datadog’s stock, trading over 50% below its 52-week high, offers potential upside as it captures a larger share of the cloud observability market, projected to reach $81 billion by 2028. Meanwhile, The Trade Desk’s forward price-to-earnings ratio of 44 presents a more attractive valuation compared to earlier in the year, with analysts predicting the company’s earnings to grow at an annualized rate of 31%.
Investors seeking long-term growth potential in the tech sector may find these stocks appealing, especially given the market’s current conditions and their strategic positions in their respective industries.
Note: This article is inspired by content from https://www.fool.com/investing/2025/05/18/should-you-buy-these-beaten-down-nasdaq-100-stocks/. It has been rephrased for originality. Images are credited to the original source.