Datadog, Inc. (DDOG) Is Competing With The Rise Of AI, Says Jim Cramer

We recently published Jim Cramer’s Fresh 14 Stocks & Thoughts About Market Performance. Datadog, Inc. (NASDAQ:DDOG) is one of the stocks Jim Cramer recently discussed.

Datadog, Inc. (NASDAQ:DDOG) is a software company that works primarily with cloud computing providers and users. The firm’s products allow customers to monitor their platforms in real-time. Datadog, Inc. (NASDAQ:DDOG)’s shares have lost 4% year-to-date, primarily on the back of an 11% dip in July. The shares have lost ground this month because of a downgrade from Guggenheim, which reduced the rating to Sell from Neutral and set a $105 share price target for the company. Cramer discussed how AI has harmed Datadog, Inc. (NASDAQ:DDOG):

“[On Morgan Stanley saying Tim Cook’s successor could benefit from having a hardware background] Well look, it’s funny hardware is part of the, I’m glad you mentioned hardware, hardware’s part of the issue of how NVIDIA got to where it is. This is an essentially, there’s a belief in many people on Wall Street and in Silicon Valley, that hardware prevails here because we’re gonna get rid of a huge number of people who would do SaaS, you know, software as a service, and that includes, yes, Salesforce, includes ServiceNow, includes DataDog which got out of the S&P. Because there are going to be fewer and fewer people who are actually in the organization who need that.”

A close-up of a laptop with a software engineer coding on the monitor.

Baron Funds mentioned Datadog, Inc. (NASDAQ:DDOG) in its Q1 2025 investor letter. Here is what the fund said:

“Most of our companies do not sell goods but instead provide critical services to their customers.Datadog, Inc. (NASDAQ:DDOG), the leading cloud-based observability platform, has seen its stock decline by over 30% year-to-date because its revenues are based on consumption/usage and would likely be impacted by any significant cyclical downturn. However, its competitive position has gotten stronger, its market share is continuing to rise, and it is indexed to promising long-term secular trends of cloud adoption and accelerating app development, and is well positioned for AI as the critical central IT infrastructure platform for its customers.”

While we acknowledge the potential of DDOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.