The S&P 500 (^GSPC -0.03%) 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 (DDOG 4.18%) and Workiva (WK -0.01%) 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.
Image source: Getty Images.
The case for Datadog
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.
Datadog was trading at a price-to-sales (P/S) ratio of around 70 when it peaked in 2021. But the 36% decline in the stock since then, in combination with the company's revenue growth, has pushed its P/S ratio down to 15.5. It's still elevated compared to many other enterprise software stocks, but it's much closer to the cheapest level since Datadog went public than it is to its lofty 2021 peak.
DDOG PS Ratio data by YCharts.
The Wall Street Journal tracks 46 analysts who cover Datadog stock, and 31 have assigned it the highest possible buy rating. Seven others are in the overweight (bullish) camp, and the remaining eight recommend holding. No analysts recommend selling. Their average price target of $140.72 implies a potential upside of 15% over the next 12 to 18 months, but investors who hold the stock for the long term could do far better as Datadog's AI products gather momentum.
The case for Workiva
Modern businesses often use dozens, or even hundreds, of digital applications to run their day-to-day operations. This is a nightmare for managers who are tasked with tracking workflows across all that software, but Workiva built an elegant solution to ease the burden.
Workiva's platform integrates with most storage applications, systems of record, and productivity software, allowing managers to pull data from all of them onto one dashboard. This saves them from having to open hundreds of individual applications, and it also reduces human error, which is common when copying mountains of data manually. Once data is loaded into Workiva, managers can select from several different templates so they can rapidly compile regulatory filings or reports for senior executives.
Workiva is also becoming a key player in the ESG (environmental, social, and governance) reporting space, offering a product that allows businesses to track their effect on all key stakeholders, not just those with a financial interest. With Workiva's ESG platform, organizations can create frameworks, track data, and compile reports on everything from their carbon emissions to the diversity of their workplace.
Workiva had 6,385 total customers at the end of Q1 2025, which was a 5% increase from the year-ago period, but its highest-spending cohorts are growing significantly faster. For example, the number of customers with annual contract values of at least $100,000 grew by 23%, and those with annual contract values of at least $500,000 soared by 32%. In other words, larger organizations with more complex operations seem to be flocking to Workiva.
The company expects to generate up to $868 million in total revenue in 2025, which would be a 17.5% increase compared to 2024. That would be a modest acceleration from the 17.3% growth it delivered last year.
As is the case with Datadog, Workiva's P/S ratio is currently down significantly from its 2021 peak. It's at 4.8 as of this writing, which is near the cheapest level since the stock went public.
WK PS Ratio data by YCharts.
The Wall Street Journal tracks 13 analysts who cover Workiva stock, and 11 of them have given it a buy rating. The remaining two are in the overweight camp, with none recommending to hold, let alone sell. Simply put, the analysts have reached a very bullish consensus.
Their average price target of $97.64 implies an eye-popping potential upside of 44% over the next 12 to 18 months. But the stock could do even better over the long term, since Workiva has barely scratched the surface of its $35 billion addressable market.
