Analysts on Wall Street foresee notable growth for Meta Platforms and Datadog by 2026.
The Nasdaq Composite saw stocks briefly enter bear market territory last year when tariffs were introduced by President Trump. However, enthusiasm surrounding artificial intelligence quickly shifted tech-heavy indexes into a new bull market.
Since 1990, the Nasdaq has encountered six distinct bull markets, with each lasting around five years and yielding an average annual return of about 31%. This historical context indicates a promising outlook for 2026. Investors currently have their eyes on Meta Platforms and Datadog.
Here’s a closer look at these AI-driven stocks.
Meta Platforms: Analysts Suggest 29% Upside Potential
Meta Platforms boasts ownership of three of the four leading social media platforms based on monthly active users. Services like Facebook and Instagram provide businesses with deep insights into consumer behaviors, guiding content recommendations and advertising strategies. Meta ranks as the second-largest advertising technology company globally and stands to expand its market share.
The company has heavily invested in AI technology. Proprietary chips lessen reliance on costly Nvidia GPUs, while custom machine learning models enhance user experiences. Plus, AI-driven creative tools streamline campaign workflows for brands. These advancements have led to increased user engagement, better ad performance, and higher charges for ad impressions.
An interesting tidbit: Meta AI, the company’s conversational assistant, has over 1 billion monthly active users, which offers yet another avenue for gathering valuable user data. Moreover, the integration of its AI assistant with smart glasses could present significant opportunities in the future.
Meta reported promising financial outcomes in the third quarter, with a revenue boost of 26%, reaching $51 billion, while GAAP net income rose by 20% to $7.25 per diluted share. Despite this, the stock price dropped after the announcement of plans for more aggressive AI development spending in 2026.
Currently, the stock is down about 18% from its peak, presenting a chance for those willing to be patient. With a P/E ratio of 29x, many consider this a fair price for a company experiencing 20% growth in recent quarters. Analysts suggest a median price target of $840 per share, reflecting a 29% potential increase from the current price of $650.
Datadog: Analysts Suggest 62% Upside Potential
Datadog specializes in observability and security software that allows businesses to monitor the performance of critical applications and infrastructure. The company is embedding machine learning into its products, including the AI engine, Watchdog, which can proactively identify anomalies and automate root cause analysis.
Recently, Gartner recognized Datadog as a leader in observability platforms and digital experience monitoring tools. A key aspect of the company’s success lies in its ability to integrate numerous observability and security tools into one platform, simplifying processes for customers.
Datadog is positioning itself well to meet the growing demand for generative AI with its LLM Observability, ensuring that large-scale language models function correctly. The new Bits AI agent autonomously investigates alerts, suggests code fixes, and assesses security signals, helping IT teams resolve issues efficiently.
In its third-quarter financial results, Datadog reported an impressive 28% revenue increase to $886 million, driven by new customer acquisitions and increased product usage from existing clients. The average spend per existing customer rose by around 20%, with CEO Olivier Pommer highlighting strong interest in the Bits AI agent. Additionally, non-GAAP earnings grew by 20% to $0.55 per diluted share.
Datadog currently trades at 15 times sales, which is below its average of 16.9 times sales over the past three years. This valuation seems reasonable given expectations of 21% annual earnings growth through 2027. The median price target stands at $216 per share according to 48 analysts, indicating a potential 62% increase from the current share price of $133.
