On the heels of a tumultuous year for the market at large and a big valuation pullback for growth stocks in particular, investors seeking deeply discounted tech stocks have plenty of options to consider. You can count CrowdStrike (CRWD -11.10%) and Datadog (DDOG 0.18%) among the list of promising companies that have seen big sell-offs, with their share prices currently down roughly 54% and 65%, respectively, from their previous high marks.

Does CrowdStrike's leading position in its corner of the cybersecurity market make it the better buy, or does Datadog's leadership in its area of the cloud-infrastructure services market make for a more appealing long-term growth story? Read on to see why two Motley Fool contributors disagree on which stock is the better buy at today's prices. 

A dollar sign in cyberspace.

Image source: Getty Images.

CrowdStrike is perfectly positioned for cybersecurity trends

Keith NoonanCrowdStrike stands as the leading provider of endpoint cybersecurity services. The company's cloud-based Falcon software platform delivers protection that aims to prevent computers, mobile devices, servers, and other hardware from being used by bad actors as portals to gain access to networks. Between its top-rated software and a rising tide of cybersecurity threats, the company has been attracting customers and growing sales at an impressive pace. 

CrowdStrike ended its last fiscal year with 23,019 customers, up 41% year over year. As of Jan. 31, 271 companies out of the Fortune 500 and more than a quarter of Global 200 companies were using the company's services. 

CrowdStrike posted $2.24 billion in sales in its recently completed fiscal year, up 54% on an annual basis, and it recorded another big earnings jump, boosting non-GAAP (adjusted) earnings per share 130%.

With midpoint guidance calling for roughly $3 billion in sales, CrowdStrike is expecting some slowdown, targeting growth of roughly 34% this year. In the face of macroeconomic pressures, the company is seeing some significant growth deceleration, but it still expects to grow adjusted net income roughly 53% this year based on the midpoint of its guidance range.

Despite being a significantly larger company, CrowdStrike is seemingly on track to grow sales and earnings at a faster rate than Datadog, and it still trades at a lower forward price-to-earnings multiple.

CRWD PE Ratio (Forward) Chart

CRWD PE Ratio (Forward) data by YCharts

I think Datadog's business has promise, as more projects, start-ups, and small businesses will inevitably be built around cloud services. But I think CrowdStrike's ability to score contracts with customers big and small in the cybersecurity market is ultimately a more appealing proposition.

Datadog is growing revenue and cash flow.

Parkev Tatevosian: Datadog is among the industry leaders in software-as-a-service (SaaS) companies. Admittedly, it isn't immune to headwinds that impact spending on software. Enterprises and institutions, reeling from several rounds of interest rate increases by the Federal Reserve and a rapidly changing consumer, have reduced, delayed, or paused spending on software upgrades.

DDOG Free Cash Flow (% of Quarterly Revenues) Chart

DDOG Free Cash Flow (% of Quarterly Revenues) data by YCharts

Datadog's revenue grew by 43.9% from the previous year in its most recent quarter, which ended in December 2022. That's in stark contrast to the growth rate of 77% in 2020 and 79% in 2021 in the comparable quarter. Despite the slowing top line, DataDog generated a free cash flow of 20.5% in its most recent quarter. The good news is that longer-term demand for digital solutions is growing. Companies can only pause or delay upgrades for so long before they become necessary.

DDOG PS Ratio Chart

DDOG PS Ratio data by YCharts

Investors can capitalize on the short-term headwinds to acquire this excellent growth stock at comparatively low valuations. Datadog is selling at a price-to-sales ratio of 13.26, near the lowest investors have been able to buy this stock for several years. Once revenue reaccelerates, you will not likely have the option to buy this stock at this valuation.

Which stock is better for your portfolio?

CrowdStrike and Datadog are both posting encouraging growth, and both companies have frontrunner status in their respective service categories and somewhat comparable valuation profiles. As such, choosing which stock is the more appealing portfolio addition could come down to whether you see greater opportunity in the endpoint cybersecurity market or the SMB cloud-infrastructure-services space. 

For growth-oriented investors looking for broad exposure to promising technology stocks, adding both CrowdStrike and Datadog to your portfolio could make sense. Each company operates in an industry that looks primed to benefit from secular growth trends, and each company has been expanding rapidly and profitably.