Global Alpha – BUY Datadog DDOG:NASDAQ

Buy Recommendation: Datadog (DDOG:NASDAQ)

Datadog (DDOG) is a recommended buy following its recent inclusion in the S&P 500, effective July 9, 2025. This achievement highlights Datadog’s impressive growth and its leadership in cloud observability and security solutions, while also opening the door for increased demand and investor interest.

Key Reasons to Buy

• S&P 500 Inclusion: Datadog’s addition to the S&P 500 has already driven a notable rally, with shares jumping 10% after the announcement. Being part of the index means automatic buying from index funds and ETFs, which boosts both liquidity and visibility among institutional investors.

• Historical Outperformance: Stocks added to the S&P 500 often outperform the broader index in the short term, as passive funds are required to purchase shares to reflect the new composition. Recent examples such as COIN, have shown that this effect can lead to meaningful gains.

• Strong Fundamentals: Datadog continues to deliver robust revenue growth, maintains high gross margins, and demonstrates a consistent record of innovation in cloud monitoring and security.

• Analyst Support: Many Wall Street analysts have reiterated buy ratings and raised price targets since the S&P 500 inclusion announcement, signaling strong confidence in Datadog’s future.

Overall, Datadog is well-positioned for further appreciation and is an attractive choice for investors seeking growth and exposure to leading-edge cloud technology.

From a short test of recent inclusions into the S&P500 index, it is very rare that any huge gaps are closed over time, so with the downside risk easy to manage, it is then a good risk/reward entry level on offer