Artificial intelligence (AI) sales in cloud and software companies are projected to grow over 600% in the next three years, with Alphabet utilizing generative AI tools for deeper engagement. Datadog, a leader in AI for IT operations, offers observability software to maintain generative AI applications. Capital spending on AI has boosted U.S. economic growth, making AI the most transformative tech since the internet. Analysts predict AI sales could exceed $1 trillion annually by 2028, recommending investment in Alphabet and Datadog for AI growth potential. Wall Street estimates show potential upside for both stocks.
Alphabet dominates as the largest adtech company globally, integrating AI tools like Perplexity and ChatGPT to engage users and source data. With a strong presence in AI infrastructure and large language models, Google’s cloud revenue is growing, bolstered by demand for AI infrastructure. Alphabet’s recent financial results exceeded expectations, with strong revenue growth and increasing demand for AI infrastructure and custom chips.
Datadog’s observability software and AI engine Watchdog automate incident detection and analysis, positioning the company as a leader in AI for IT operations. The company’s financial results outperformed estimates, with growth in revenue and non-GAAP earnings. Analysts project strong growth in adjusted earnings through 2028, despite a seemingly high valuation. Datadog’s consistent beat of earnings estimates and focus on cost savings make it a compelling investment option.
Investors with a long-term horizon are encouraged to consider investing in both Alphabet and Datadog, as AI continues to drive growth in the tech sector. The Motley Fool Stock Advisor team has identified potential investment opportunities beyond Alphabet, offering insights into top-performing stocks for substantial returns. Consider historical returns and market outperformance when evaluating potential investments in AI stocks.
Read more at Nasdaq: AI Sales May Soar 600% by 2028: 2 Brilliant AI Stocks to Buy Now, According to Wall Street