2 Super AI shares to buy Hand Over Fist, according to Wall Street

Wall Street doesn’t always get things right, and it’s probably not wise to base an investment decision on what a single analyst says. But it can pay to listen when a large group of analysts reaches a clear bullish consensus about a particular stock. Sometimes, it is a sign that there may be positive catalysts on the horizon that will help the upward momentum.

Conformable The Wall Street Journalmost analysts polled by the paper give both Confluent (CFLT -2.85%) and Datadog (DDOG -2.54%) the highest possible buy rating. In fact, no analyst recommends selling any of these AI stocks. Here’s why.

1. Confluent: A leader in data flow

You may have never heard of data streaming, but I guarantee you interact with the technology on a regular basis. When we shop online, the data stream feeds the live inventory information we use to make purchasing decisions. Similarly, it feeds data feeds from our share trading and sports betting platforms to ensure we get up-to-date prices in real time.

The creators of the open-source data streaming platform Apache Kafka founded Confluent to improve its capabilities and help enterprises deliver more live customer experiences. Walmartfor example, it uses Confluent to connect its online and brick-and-mortar stores for real-time inventory management, so the company knows instantly every time a product is sold at any location. This means Walmart can replenish inventory before it runs out, so customers can always find what they need when they visit Walmart in person or online.

Confluent believes the addressable market in data streaming is worth $60 billion. However, that number could grow thanks to artificial intelligence (AI) as developers turn to platforms like Confluent to build data pipelines at scale. Simply put, the success of an AI model depends on its ability to quickly absorb data so that it can produce accurate answers or predictions. It’s no surprise, then, that 90% of IT professionals believe the flow of data will drive innovation in the AI ​​industry, according to a recent survey by Confluent.

Confluent generated $865 million in revenue over the past four quarters, so it’s barely scratched the surface of its opportunity. It had 5,440 customers at the end of its recent second quarter (ended June 30), which was up 13% from a year ago, but its highest-spending cohorts grew even more quickly. The company had 1,306 customers spending at least $100,000 a year on its platform, up 14 percent, and 177 customers spending at least $1 million, up 20 percent.

These figures underscore the growing importance of data flow among larger organizations.

The Wall Street Journal tracks 32 analysts covering Confluent shares, and 21 have given it the strongest possible buy rating. Four more are in the overweight (bullish) camp and six recommend holding. Although one analyst has assigned an underweight (bears) rating to the stock, no analyst is recommending a sell.

The average 12-month price target of $30.79 represents a 49% upside to where Confluent is trading at the time of writing, but based on the company’s growth and its addressable market, it could rise further in the long term long.

2. Datadog: A unique AI game

Datadog has developed a platform capable of monitoring cloud infrastructure around the clock. Because most businesses now have an online presence, they can reach a global customer base, which means their digital channels need to run smoothly 24 hours a day.

The Datadog platform can instantly alert an e-commerce operator if their website suffers a technical error in a specific country, so they can fix it before it affects the customer experience. In the past, they might not have known there was a problem until they experienced a drop in sales, by which time it would have been too late.

More than 28,700 companies, including retailers, gaming companies, banks, education providers and more, rely on Datadog to monitor their infrastructure.

However, the company recently entered the AI ​​industry with a new tool designed to monitor large language models (LLM). An LLM is at the heart of any AI software application or chatbot, and Datadog’s new platform can help developers track costs, measure the performance of their models, and diagnose technical issues. Ultimately, this can give developers the confidence to bring their AI software to market faster.

Datadog generated $645 million in revenue in its latest Q2 2024 (ended June 30). CEO Olivier Pomel said that 4% was attributed to AI, in particular, which doubled from 2% in the period a year ago. In addition, he said that about 2,500 customers are already using Datadog’s AI tools, which is about 8.7% of the customer base.

According to a recent survey by PwC, approximately 70% of executives at leading corporations say that artificial intelligence will significantly change the way their organization creates value in the next three years. Therefore, Datadog will likely see the adoption of its AI tools increase significantly among its existing customer base, but they will also likely be a big draw for new customers.

The Wall Street Journal tracks 42 analysts covering Datadog shares, and 28 have given it the strongest possible buy rating. Another seven are in the overweight (bullish) camp, while another seven recommend holding. No analyst recommends selling.

The average 12-month price target of $144.73 represents a 28% upside to where Datadog is trading at the time of writing, but with millions of companies likely to adopt AI over time, investors should take a much longer term view with this stock. Additionally, Datadog shares hit an all-time high of $192 in 2021, so that could be a realistic target for the next few years.