Datadog (DDOG) and Atlassian (TEAM) are good examples. The prices are 35% and 57% behind their all-time highs, respectively, while rising from 2022 lows. Here's why they could advance this year and beyond.
1. Datadog An increasingly digital world where consumers value convenience over virtually everything requires companies to adapt. Businesses rent processing power from Microsoft and Amazon's centralized data centers to run their sales channels and customer experiences online at low cost. This is cloud computing.
The cloud complicates everything. An attendant is always present to supervise the process and measure client satisfaction, making physical shop sales easy. However, digital sales platforms have blind spots. A company may not realize its website isn't operating for a certain group of clients in one region until revenue is lost.
Datadog's cloud monitoring platform monitors more than 27,300 firms' infrastructure 24/7 and fixes technical issues before they harm sales. Datadog serves retail, entertainment, gaming, financial services, and more.
Datadog launched Bits AI, an AI-powered virtual assistant, to help organizations maximize its cloud monitoring platform. Managers can swiftly explore and fix issues with its conversational interface. Managers save hours by having Bits AI create a report and post it on staff chat channels when Datadog detects an event.
AI developer monitoring is another Datadog expansion. It provides new tools to track large language model (LLM) performance and characteristics to improve customer-facing apps. For organizations using ready-made LLMs like OpenAI, Datadog offers observability tools to track use expenses.
The corporation earned a record $2.1 billion in 2023, up 27% from 2022. The $48.5 million profit was a welcome change from the $50.1 million net loss from the previous year. The outcome shows Datadog can expand top-line and manage costs to be profitable. Datadog could develop like the cloud as firms deploy AI, especially as usage speeds. AI developers make up only 3% of the company's yearly recurring revenue, but investors can expect it to rise soon.
2. Atlassian Over 302,000 firms utilize Atlassian's Jira and Confluence collaborative software. AI may help the company flourish long-term as it expands its product offering.
Software engineers establish workflows, track defects, and release changes on Jira. Since Confluence was developed to let teams cooperate on all aspects of running an organization, its use case is broader. It helps employees brainstorm, strategize, and make important decisions. Teams can also separate their material from the rest of the company in dedicated workspaces.
Atlassian released an AI helper last year using its own and OpenAI models. Atlassian Intelligence can draft and summarize text to speed up Jira and Confluence collaboration. It can also serve customers and employees as a virtual agent, saving firms money over time.
Video and AI platform Loom was acquired by Atlassian for $975 million last year. Loom lets users quickly make videos and screen recordings for Jira and Confluence posts. To avoid misunderstandings, Loom adds a visual aspect to text instructions. AI technologies from Loom assist viewers summarize videos, remove silent pauses, and classify chapters.
In the fiscal 2024 second quarter (ending Dec. 31), Atlassian earned over $1 billion for the first time. Because the corporation is carefully managing costs to boost its bottom line, its 21.5% year-over-year increase slowed from previous quarters. Atlassian lost $84 million in Q2, down 59% from $205 million the year before.
AI, like Datadog, could boost Atlassian growth over time. Atlassian Intelligence is only available on Jira and Confluence Premium and Enterprise plans, not Standard. Most firms will eventually need AI functionality, thus they must pay for Atlassian's most expensive tiers. Thus, Atlassian stock's 57% discount from its all-time high may be suitable for investors who can hold for at least a few years while the AI opportunity grows.
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