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Datadog and CrowdStrike: Two Growth Stocks with Strong Potential

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  Published in Stocks and Investing on Monday, January 5th 2026 at 21:03 GMT by The Motley Fool

Two Growth Stocks Poised to Soar: A Look at Datadog and CrowdStrike (According to The Motley Fool)

The Motley Fool recently published an article highlighting two growth stocks that analyst Park Rutherford believes are primed for continued success – Datadog (DDOG) and CrowdStrike (CRWD). In a market often dominated by established giants, these companies represent the potential of disruptive technology and offer compelling investment opportunities for those seeking significant long-term gains. While acknowledging inherent risks associated with growth stocks, the article argues that both possess strong fundamentals, robust competitive advantages, and address expanding market needs.

Datadog: Monitoring the Modern Digital World

The first stock highlighted is Datadog, a cloud monitoring platform. Rutherford emphasizes Datadog's critical role in the increasingly complex world of modern software development and deployment. Businesses are rapidly migrating to cloud-based infrastructure, resulting in sprawling, distributed systems that require constant monitoring and analysis. This is where Datadog shines. The company’s platform integrates data from various sources – applications, infrastructure, logs, security events – providing a single pane of glass for DevOps teams and IT professionals.

The article points out that Datadog isn't just about basic uptime monitoring; it offers advanced features like anomaly detection, incident response tools, and real-time analytics. This comprehensive approach allows companies to proactively identify and resolve issues before they impact users, ultimately improving efficiency and reducing costs. As businesses increasingly rely on cloud services and microservices architectures, the demand for robust monitoring solutions will only grow – a tailwind strongly favoring Datadog's continued expansion.

Rutherford notes that Datadog’s impressive customer retention rate (measured as Net Revenue Retention or NRR) is a particularly encouraging sign. An NRR consistently above 100% indicates that existing customers are increasing their spending on the platform, demonstrating its value and stickiness. This signifies not just acquiring new clients but also deepening relationships with current ones – a crucial driver of sustainable growth. The article references Datadog's Q3 2023 earnings report (linked within the original article) which showcased an NRR of 125%, confirming this strength.

While acknowledging that Datadog’s valuation remains relatively high, Rutherford believes the company’s strong growth prospects and leadership position justify the premium. He sees potential for continued expansion into new areas like application security and observability beyond just infrastructure monitoring. The linked article “Datadog Stock: Buy, Sell, or Hold?” provides further context on this valuation discussion.

CrowdStrike: Leading the Cybersecurity Charge

The second growth stock featured is CrowdStrike, a cybersecurity company specializing in endpoint protection and threat intelligence. In an era of escalating cyberattacks and data breaches, CrowdStrike has emerged as a leader in its field. The article highlights that CrowdStrike's Falcon platform uses artificial intelligence and machine learning to proactively detect and prevent threats across endpoints (laptops, servers, mobile devices).

What sets CrowdStrike apart is its "land and expand" strategy. They initially sell their endpoint protection services, then progressively add additional modules like identity protection, cloud security, and data loss prevention. This approach allows them to build deep relationships with customers and increase their lifetime value. The article draws attention to the fact that many of CrowdStrike’s clients are large enterprises, demonstrating the platform's ability to handle complex security needs at scale.

Rutherford emphasizes CrowdStrike’s significant market share in endpoint protection – a testament to its effectiveness and reputation within the industry. The company consistently wins new business from competitors, further solidifying its position as a key player. The original article links to a report highlighting this competitive advantage. The ever-present threat landscape ensures that demand for cybersecurity solutions will remain robust, providing CrowdStrike with a long runway for growth.

Like Datadog, CrowdStrike isn't cheap. Its valuation reflects the company’s impressive performance and future potential. However, Rutherford argues that the ongoing need for sophisticated cybersecurity measures makes CrowdStrike a worthwhile investment even at its current price. He believes the company can continue to expand into new areas of security, further driving revenue growth.

Risks and Considerations

The article doesn't shy away from acknowledging the risks associated with investing in growth stocks. Both Datadog and CrowdStrike face competition from larger, more established players. Economic downturns could also impact their growth rates as companies cut back on spending. Furthermore, cybersecurity threats are constantly evolving, requiring both companies to continuously innovate and adapt to stay ahead of attackers. Finally, high valuation multiples mean that any disappointment in future performance can lead to significant stock price corrections.

Conclusion: A Long-Term Perspective

Overall, the Motley Fool's article presents a bullish case for Datadog and CrowdStrike. Both companies are well-positioned to capitalize on long-term trends in cloud computing and cybersecurity. While acknowledging the inherent risks associated with growth stocks, Rutherford believes their strong fundamentals, competitive advantages, and expanding market opportunities make them compelling investments for patient investors seeking substantial returns over time. The key takeaway is a focus on long-term potential rather than short-term price fluctuations – a crucial mindset when investing in high-growth companies.

Disclaimer: I am an AI chatbot and cannot provide financial advice. This summary is based solely on the provided URL and should not be considered a recommendation to buy or sell any securities.