Many investors have been shifting their attention away from growth stocks recently as the market has experienced significant price swings.
Some investors are looking for more stable investments during an uncertain time. That can be a good investing strategy, but so can buying shares of fast-growing companies that have seen their share prices tumble recently.
Investors on the prowl for a couple of red-hot growth stocks to buy now that could be fantastic long-term investments need to look no further than Nvidia (NVDA 3.65%) and Datadog (DDOG 3.58%). Here's why.
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1. Nvidia
You'll likely find Nvidia on a lot of lists of growth stocks because there seems to be no slowing down this tech giant.
For the full fiscal year 2022, the company's sales spiked 61% and its net income more than doubled to $9.7 billion. Nvidia makes most of its revenue from its gaming segment, but over the past few years, the company has vastly expanded the use of its chips into new areas, including data centers.
Some of the world's largest tech companies use Nvidia's graphics processors in their data centers, including for artificial intelligence, which has resulted in the company increasing its data center sales by 185% in less than two years.
And there are plenty of avenues for new growth from the company as well. One promising market could be the metaverse, in which people spend time in a digital environment using an avatar. Meta Platforms, the parent company of Facebook, is transitioning to the metaverse and is working with Nvidia to use some of its technology to help build its version of it.
The metaverse will require immense amounts of computing power and graphics processing -- and Nvidia's chip will likely help tech companies achieve their metaverse visions. And with the global metaverse market size expected to reach an estimated $758 billion by 2026, there's plenty of room for Nvidia to benefit from it.
Nvidia stock is up 74% over the past year despite trading at a 34.5% discount to its 52-week highs, making it a buy right now.
2. Datadog
Another fantastic growth stock that many investors have already stumbled upon is the monitoring and security platform Datadog. The company's cloud application services have proved their mettle over the past few years and Datadog's most recent quarterly results prove its popularity among its customers.
Datadog's sales increased 84% in the fourth quarter (reported on Feb. 10) to $326 million and full-year sales for 2021 popped 70%, surpassing $1 billion. This impressive sales growth was fueled by happy customers, more than a third of which are signed up for at least four Datadog services.
The company has successfully built out its customer base to 18,800 -- a 32% increase year over year -- and boasts an impressive dollar-based net revenue retention rate of 130%.
Not only is Datadog growing at a healthy clip, but its stock has also held up better than some other growth stocks over the past several months. Even as tech stocks have taken it on the chin over the past six months, Datadog's share price has still increased 51% over the past year, compared to the S&P 500's 10% gains. it's currently trading about 35% lower than its 52-week highs.
There's no guarantee that the company's share price will keep climbing, of course, but with Datadog already seeing huge revenue gains and strong loyalty from its expanding customer base, it's likely that there are still plenty of good times ahead for this tech stock.
