Controversial investor Cathie Wood has made a bold prediction. She believes that AI software will be the next big thing, eventually earning $8 in revenue for every $1 spent on AI chips such as those by Nvidia. If she’s right, two AI software companies in particular could be poised for massive growth.
Palo Alto Networks (NASDAQ: PANW)
Palo Alto Networks is the largest competitor to cybersecurity titan CrowdStrike. In the wake of CrowdStrike’s global IT outage last week, it may have the opportunity to scoop up some customers. Regardless of how much of an effect that outage has, though, Palo Alto is still in great shape on its own.
The company offers true full-service, one-vendor cybersecurity across three platforms: network security, cloud security, and security operations. It’s currently working AI into all of its platforms, which is starting to revolutionize the cybersecurity process. For example, one of its security operations center customers reports that the new AI product has reduced the time it takes to resolve an incident from three days to less than two hours. As more and more businesses come on board, Palo Alto expects to more than triple its annual revenue from $4 billion in fiscal 2024 to $15 billion by 2030. Few companies are successfully monetizing AI thus far, so Palo Alto is definitely one to watch.
Datadog (NASDAQ: DDG)
Datadog’s highly successful cloud platform continuously monitors digital infrastructure for more than 28,000 businesses across a variety of sectors. It immediately flags technical issues so that they can be patched before they impact the customer experience. Datadog has now turned its power and experience to the AI industry.
Datadog’s new large language model (LLM) monitoring platform gauges the quality of chatbot responses, monitors consumption, and allows developers to quickly diagnose and fix problems. The company also offers a monitoring tool for developers working with OpenAI ready-made LLMs. In addition, this tool allows managers to track OpenAI usage throughout their organization, allowing them to optimize workloads and monitor consumption.
As of the first quarter of 2024, about 3.5% of Datadog’s revenue was from AI customers, which means there is a lot of room to grow. The company expects to reach about 5% by the end of the year. As additional companies adopt AI and begin to realize that they need to monitor it, the sky is truly the limit. It may take a bit of time, but patient investors could do quite well with Datadog.
Neither Lisa Fritscher nor Stocks.News have positions in either of these companies.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...