Should I Buy data dog (DDOG)? Finance YouTuber Analysis

The YouTuber suggests Data Dog as an important company in the 'security and observability' layer, explaining that as AI workloads go live, they create new attack surfaces. He emphasizes that robust security is essential for enterprise AI adoption, making Data Dog's offerings critical for protection and monitoring.

“Bottleneck seven is security. Crowdstrike, Palto networks, and data dog sit at the intersection of AI infrastructure and protection. Every new workload that goes live is a new attack surface. Security is not optional at the enterprise level.” — ▶ Watch clip

The YouTuber includes Data Dog in the 'robust' category but offers limited specific analysis beyond grouping it with Snowflake and Viva, suggesting it's less vulnerable to AI disruption due to its deterministic nature.

“The next trench after that includes Snowflake, Data Dog, Shopify and Viva.” — ▶ 8:25

The YouTuber finds Datadog's valuation of 53 times free cash flow and 14.2 times sales to be too expensive, even with strong revenue growth (27% annually) and cash flow growth (37% annually). Despite benefiting from AI, he believes the stock is overvalued and not offering value at its current price.

“However, I do think that the price tag of 53 times free cash flow is still pretty expensive for this business, even if it is growing by 26% per year. So, I don't think that this one is necessarily undervalued or offering value in the market today, even though it stock is in that 30% correction.” — ▶ 1:02:50

The YouTuber recommends DataDog as a buy, noting that its recent correction, despite a slowdown in revenue growth, has made it more attractive. The company has positive but flat profits, good past revenue growth, reducing debt, and steady operating cash flow, consistently beating forecasts. The current price is below analysts' lowest price target of $120, suggesting over 34% upside.

“the correction is a little bit exaggerated which does give it a little bit more value when we look at their financials their profits are positive but they happen to be flat and their revenue growth has been good in the past” — ▶ Watch clip