“Designing products through focus groups is really hard. A lot of times, people don’t know what they want until you show it to them.” is a famous quote from co-founder, Steve Jobs appleAnd the company’s portfolio of innovative products certainly lives up to it.
The iPod (coupled with iTunes) changed the music industry forever, and the iPhone completely revolutionized the mobile phone landscape. Apple is now a $2 trillion company, and while the stock remains a great investment, some of the best returns could come from next-generation innovations.
In this case, I want to focus on cloud computing. According to Grand View Research estimates, the industry could triple in value between now and 2030 to $1.5 trillion annually. Any business, large or small, can now serve a global customer base thanks to online tools delivered in the cloud.
Datadog (DDOG -8.89%) and Snowflake (Snow -6.02%) has developed unique platforms with the potential to advance cloud technology for many years to come. Here’s why these future stocks are worth buying today.
1. Datadog is an essential cloud monitoring tool
The cloud allows businesses to do more with less. Thanks to cloud technology, hosting a website, managing administrative tasks, accepting payments, and storing data has never been easier or cheaper than it is today. But building and maintaining a digital presence comes with challenges—especially for large, complex organizations.
Datadog is a cloud monitoring service designed to detect technical problems that sometimes go unnoticed. It helps companies run day-to-day operations through the cloud migration phase. When businesses operate physical stores, it is relatively easy to determine customer satisfaction because there is face-to-face interaction. But when dealing with thousands of customers online, concerns often manifest as lost sales because there is no channel for immediate support.
Whether it’s a retail store, gaming platform, or financial institution, Datadog can identify problem areas as they pop up, allowing companies to implement solutions before they come into contact with customers. A technical bug may be affecting a small subset of users in a specific geographic location, for example, which a business may not be aware of without a tool like Datadog.
Especially large organizations have flocked to the platform. As of the most recent third quarter of 2022 (ended September 30), Datadog had 2,600 customers contributing at least $100,000 in annual recurring revenue, up from 1,800 at the same time last year. The company’s revenue is set to top $1.65 billion for the full year, increasing by 60% over 2021.
The future of the business world is in the cloud, and as that shift continues Datadog will be increasingly essential. With its stock down 66% from its all-time high, there’s no time like the present to buy for the long term.
2. Snowflake streamlines complex cloud operations
Snowflake is a data solution for organizations with multi-tier cloud operations, especially for those using several leading providers of cloud services, e.g. Amazon web services, Microsoft Azure, and Alphabetof Google Cloud. The company is known for its incredibly fast growth, and even has the backing of Warren Buffett’s investment company. Berkshire Hathaway.
Snowflake’s revolutionary data cloud allows customers to aggregate data from multiple sources and share it seamlessly across teams, breaking down silos to improve visibility and increase efficiency. It runs on a pay-per-use model, so companies can access all the computing power they need while analyzing mountains of information to draw insights, and easily scale during periods of low demand.
The company also hosts a marketplace where customers can buy datasets, or monetize their own data, adding another benefit to being part of the Snowflake ecosystem.
The US technology sector had a rough 2022 amid an economic downturn and as a result, 159,000 workers were laid off. But Snowflake bucked the trend and hired more than 500 new employees in the first three quarters of the year.
This was a necessary step to sustain Snowflake’s rapid growth. In the third quarter of fiscal 2023 (ended October 31), the company’s outstanding performance obligations (RPOs) surpassed $3 billion for the first time—a 66% year-over-year increase. RPOs are a key metric because they represent Snowflake’s pipeline of work, which is ultimately expected to convert into revenue in the future.
The company has 7,292 customers, but only 543 of the Forbes Global 2,000 have signed up, so there’s still plenty of room for growth. With Snowflake stock down 66% from its all-time high, this may be the best time to buy ahead of the cloud industry’s expansion through the rest of the decade.
John Mackey, former CEO of Whole Foods Market, is a member of the board of directors of The Motley Fool, an Amazon subsidiary. Suzanne Frey, an executive at Alphabet, is a member of the Motley Fool’s board of directors. Anthony Di Pizio has no positions in any of the stocks mentioned. The Motley Fool has and recommends positions in Alphabet, Amazon.com, Apple, Berkshire Hathaway, Datadog, Microsoft, and Snowflake. Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway, long March 2023 $120 calls on Apple, short January 2023 $200 calls on Berkshire Hathaway, short January 2023 $265 calls on Berkshire Hathaway, and short March 2023 $231 calls. apple Motley Fool has a disclosure policy.