Anthony Di Pizio, The Motley Fool

Thu, Jun 19, 2025, 1:49 AM6 min read

• The S&P 500 is hovering near an all-time high, but some stocks in the software space still haven't reclaimed their best levels from 2021.

• Datadog and Workiva are two of those stocks, but their strong businesses could fuel a recovery over the long term.

• Analysts have reached a very bullish consensus on both Datadog and Workiva.

• 10 stocks we like better than Datadog ›

The S&P 500 (SNPINDEX: ^GSPC) has almost fully recovered from its recent 19% drop, which was triggered by President Donald Trump's "Liberation Day" tariffs in April. But not every stock is following along -- in fact, many enterprise software stocks still haven't reclaimed their record highs from 2021.

Datadog (NASDAQ: DDOG) and Workiva (NYSE: WK) are two of those stocks. They were incredibly overvalued when they peaked a few years ago, and they are still down by 36% and 57%, respectively, from those lofty levels. But they're starting to look quite attractive.

The majority of the analysts tracked by The Wall Street Journal who cover Datadog stock and Workiva stock have assigned them the highest possible buy rating. Here's why their optimism might be justified.

Datadog developed an observability platform that monitors cloud infrastructure around the clock, alerting businesses to technical issues and outages which they might not have discovered until customers were affected or sales were lost (at which point it's too late). Over 30,500 businesses are using Datadog, and they operate in many different industries, including gaming, manufacturing, financial services, retail, and more.

Last year, Datadog expanded into artificial intelligence (AI) observability with a new tool that helps developers troubleshoot technical issues, track costs, and assess the outputs of their large language models (LLMs). During the recent first quarter of 2025 (ended March 31), the company said that the number of customers using this new tool more than doubled compared to just six months earlier, which suggests it's gaining serious traction.

Datadog also offers other AI products, like a monitoring solution for businesses using ready-made LLMs from OpenAI, and an AI-powered virtual assistant for its flagship observability platform. Overall, the company said that 4,000 customers were using at least one of its AI products in Q1, which also doubled year over year.

On the back of a strong first-quarter result, Datadog raised the high end of its full-year revenue forecast for 2025 to $3.235 billion, up $40 million from management's original guidance. It would represent growth of 21% from the company's 2024 result, but it would still be a drop in the bucket compared to the $53 billion addressable opportunity in the observability space alone.