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This Artificial Intelligence (AI) Stock Is Surging After Joining the S&P 500. Can It Continue to Skyrocket?

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Shares of Datadog (DDOG -4.23%) shot up nearly 15% on July 3 after it was revealed that the provider of cloud-based observability, monitoring, and security solutions will join the S&P 500 index on July 9.

Datadog will be replacing Juniper Networks in the index after the latter was acquired by Hewlett Packard Enterprise. It is easy to see why Datadog’s inclusion in the index has sent its stock soaring. To enter the index, a company needs to demonstrate solid profitability in the past four quarters, along with enough liquidity.

Datadog’s inclusion in the S&P 500 over other contenders is a positive for the stock, as it demonstrates the market’s confidence in the company. It’s also worth noting that the stock has shot up a remarkable 76% in the past three months following its latest surge. Does this mean it is too late to buy Datadog stock? Let’s find out.

Image source: Getty Images.

Datadog’s rally has made the stock expensive

Datadog’s cloud-based observability platform allows customers to monitor their cloud activity across servers, databases, and applications to detect issues, while its security features scan for vulnerabilities so that they can be fixed quickly. The demand for Datadog’s cloud observability solutions has been rising at an impressive pace, thanks to the secular growth of the cloud market.

Now, the company is also providing tools for monitoring large language models (LLMs) and other artificial intelligence (AI) applications. The company is targeting lucrative end markets that are currently worth around $80 billion. This indicates that it has a lot of room for long-term growth. It has generated $2.8 billion in revenue in the trailing 12 months.

However, investors will now have to pay a rich premium to buy into Datadog’s potential growth. That’s because it is now trading at a whopping 330 times trailing earnings. Though the forward earnings multiple of 82 is significantly lower than the trailing multiple, it is still on the expensive side when compared to the S&P 500 index’s average earnings multiple of 24.

The price-to-sales ratio of 20 is over 6x the index’s average sales multiple. The only way Datadog stock can sustain its impressive stock market momentum is by delivering stronger-than-expected growth and outpacing Wall Street’s growth expectations. But can the company do that?

Datadog’s growth could accelerate thanks to AI

We have already seen that Datadog is scratching the surface of a massive end-market opportunity in the cloud observability market. The advent of AI is likely to help it corner a bigger portion of the addressable market on offer by opening up a cross-selling opportunity. Datadog had 30,500 customers at the end of the previous quarter, and 4,000 of them have been using one or more of its AI services.

Importantly, Datadog management says that this number doubled on a year-over-year basis in the previous quarter, and the good part is that this trend is likely to continue. After all, customers are flocking toward Datadog to improve the performance of their LLMs with its observability solutions. The company points out that “the number of companies using LLM Observability has more than doubled in the past 6 months.”

That’s the reason why Datadog is now pushing the envelope on the product development front by bringing new AI-focused solutions to customers. Its Bits AI platform helps customers investigate incidents, fix code, and review security alerts autonomously. All this should eventually allow Datadog to accelerate its growth rate in the future as the adoption of AI applications in the cloud increases.

For instance, the size of the LLM market is expected to jump by more than 6x by 2030, which should lead to an increase in the demand for Datadog’s offerings. Not surprisingly, analysts are forecasting an acceleration in Datadog’s growth going forward.

DDOG Revenue Estimates for Current Fiscal Year Chart

DDOG Revenue Estimates for Current Fiscal Year data by YCharts.

This improvement in the company’s top-line growth is expected to filter down to the bottom line as well, as shown in the chart below.

DDOG EPS Estimates for Current Fiscal Year Chart

DDOG EPS Estimates for Current Fiscal Year data by YCharts.

However, don’t be surprised to see Datadog’s earnings grow at a faster pace than Wall Street’s expectations as a large chunk of its existing customer base is yet to adopt its AI solutions. This huge cross-selling opportunity should enable the company to win a bigger share of existing customers’ wallets and improve its margin profile.

Datadog seems to be in a position to justify its expensive valuation by stepping on the gas. That’s why it could entice growth-oriented investors, even after the impressive gains that it has clocked in recent months.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog. The Motley Fool has a disclosure policy.



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‘Cruising is booming:’ Why luxury hotel brands are launching lavish cruise ships | Exclusive

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Ritz-Carlton and Four Seasons are two of the world’s most renowned and expensive and hotel companies.

But forget staying in their hotel rooms – they’re among the top travel brands taking to the water.

And Waldorf Astoria – which is owned by Hilton – is the latest travel firm to strike out, launching a luxury Nile cruise in 2026.

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American personality Martha Stewart on a Ritz-Carlton superyacht. (Instagram/susanmagrino7)

More akin to mega yachts and much smaller than regular cruise ships these vessels hold just a few hundred cashed-up guests. 

Ritz Carlton recently launched its third ship, Luminara, with an A-list filled party.

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Models Kendall Jenner and Naomi Campbell, TV host Martha Stewart, and actors Orlando Bloom and Kate Hudson were among those invited to the extravagant party.

Outside of hotels, on-the-ground tour company Trafalgar announced it is also expanding into river cruising with two new ships, the Trafalgar Verity and Trafalgar Reverie, for sailings on the Rhine and Danube rivers, starting in April 2026.

It's set to bring a new spin on luxury sailing.Upmarket hotel group Four Seasons has revealed new details and images of its first yacht.
Four Seasons I won’t be anything like a normal cruise ship. (Supplied)

Ted Blamey Principal at specialist cruise consulting firm CHART Management Consultants says there are many reasons all these firms want in on the water-bound holidays.

“The first is basically that cruising is booming, so it’s a great opportunity for experienced travel and accommodation companies to capitalise on,” he tells 9Travel.

“Second, I guess, would be, that these organisations, they have very powerful existing guest basis.

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Ritz Carlton
One Ritz Carlton’s super yachts. (Supplied)

“They have a very significant number of past guests who are loyal to the brand, and love it, and why not offer them something new that will continue to get their loyalty and of course, earn revenues.

“I guess another reason is that these same people are open to new experiences.”

Meanwhile he said cruising is unique from a business point of view because guests are captive on the vessel much of the time.

And that means you can control their holiday – as well as retain much of the money they pay to be there.

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Martha Stewart on the Ritz Carlton superyacht
Martha Stewart on the Ritz Carlton superyacht. (Instagram/marthastewart48)

The new players are competing against other luxury cruise brands such as Crystal Crusies, Ponant, Explora Journeys, Azamara, Silversea, and Regent Seven Seas.

But this could be good for the whole industry Ted says.

“I think all of us in the industry have felt for years that competition is a good thing, it grows the market,” he says.

Actress Simone Ashley is the godmother of Luminara from The Ritz-Carlton Yacht Collection. (Getty Images for The Ritz-Carlto)

Even Orient Express, most famous for its lavish trains, is getting involved. It’s planning the world’s largest sailing ship, Orient Express Silenseas, for next year.

Smaller Swiss brand, Aman is also setting sail.

Meanwhile, images show the first vessel for Four Seasons won’t be anything like normal cruiser.

The yacht will have an extendable marina on both sides for water sports, swimming or simply posing for Instagram photos.

Aman at Sea's inaugural ship, Amangati—a 47-suite luxury motor yacht
Aman at Sea’s inaugural ship, Amangati is a 47-suite luxury motor yacht. (Supplied)

Captain Kate McCue has jumped ship from Celebrity Cruises to captain it.

But one thing all the vessels will have in common is that their high-net-worth guests can enjoy the finest things the world can offer.

That includes an almost one to one crew member to guest ratio, fine dining meals from top chefs and lavish suites with huge terraces.

Prices are not always widely advertised but run into the tens of thousands, making a trip something everyday Aussie cruises can only dream of.

Private islands and exclusive destinations you can visit on cruises



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Vermont lawmaker co-chairs national AI task force

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MONTPELIER, Vt. (WCAX) – A Vermont lawmaker has been selected to co-lead a national task force on artificial intelligence policy.

It’s part of a nationwide effort by Future Caucus to arm state lawmakers with knowledge and expertise on AI.

Bradford Democratic Rep. Monique Priestley co-chairs the task force with a Republican representative from Utah.

She says her focus is to learn more about how AI impacts consumer protection and data policy.

“Right now, AI is touching everything that we are interacting with. It’s used in software that determines if you can get a loan, if you can get an apartment, or whether or not you qualify for different education. Your health care is largely impacted by artificial intelligence,” Priestley said.

The task force will connect lawmakers with expert voices in the industry and create a first-of-its-kind bipartisan state AI policy memo to guide policymaking across the country.



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Travel Companies Spent Big in the Second Quarter on Lobbying

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From April through June, the tourism and travel industries grappled with several political challenges at once: President Donald Trump’s “Liberation Day” tariff turbulence. Messy debates over the “One Big Beautiful Bill.” U.S. travel bans and declining tourism from abroad.

In response, many of the nation’s biggest airlines, hotels, travel service companies, and associated trade associations spent bigger-than-usual amounts to lobby Congress and the Trump administration, according to a Skift analysis of new federal lobbying disclosure documents filed Monday.

This government influence spending, which includes money spent on both in-house and for-hire lobbyists in Washington, D.C., is designed to defend industry and corporate interests and advocate for favorable policies and legislation.

Among the notable revelations:

Where Spending Rose

Trade Groups: The U.S. Travel Association reported a spike in its lobbying activity during the second quarter ($1.03 million) versus a year earlier ($900,00). 

It was also well beyond what it spent during the same period in 2021 during Joe Biden’s first year as president ($840,000) and in 2017 during the first year of Trump’s first term ($640,000).

“Lobbying expenditures during the first year of a new presidential administration or new Congress typically increase — along with legislative and regulatory action — compared to the previous year,” U.S. Travel Association spokesperson Spencer



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