Artificial intelligence stocks, as a group, have been the driving force behind the continued gains in the S&P 500 index in 2025. Many of the largest companies in the world pushing artificial intelligence forward have seen their stock prices outpace the broader market gains. But not every AI stock has been a big winner in 2025.
That doesn't mean they can't turn into outperformers in 2026. In fact, now may be a great opportunity to buy into two AI stocks that are down 30% and 73%, respectively, from their recent high prices before they turn around next year. Here's why it's worth taking a closer look at The Trade Desk (TTD +1.70%) and DataDog (DDOG 2.26%) right now.
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1. The Trade Desk
The Trade Desk has seen its stock fall precipitously in 2025 as it faced both internal and external challenges.
The company got off to a rocky start for the year, reporting fourth-quarter revenue and earnings that fell short of its own outlook by a wide margin. Management attributed the earnings miss to a larger-than-normal annual reorganization in December and the transition to its new AI-powered Kokai platform.
However, revenue growth has been relatively disappointing for the first three quarters of 2025 as well. Revenue is still climbing quickly, up 20% through the first nine months of 2025, but not as quickly as investors are used to. Revenue climbed 27% for the same period a year ago. Third-quarter results were particularly worrying, with revenue up just 18%.
Many see Amazon's (AMZN +0.11%) push into the demand-side platform space for connected-TV advertising as a big threat to The Trade Desk's continued growth. The tech giant is reportedly massively undercutting The Trade Desk's pricing and inking deals with major streaming platforms, including Netflix and Disney.
NASDAQ: TTD
Key Data Points
CEO Jeff Greene has dismissed those concerns, noting Amazon and other big adtech companies are primarily focused on their walled gardens of owned and operated ad inventory. The Trade Desk, on the other hand, is focused on connecting advertisers to inventory on the "open internet," as Greene puts it. To that end, The Trade Desk's non-biased data-driven performance is a key differentiator from the competition. Plus, its AI algorithms are based on a wide variety of advertisers and inventory history, which can lead to better ad performance for future campaigns. Still, based on the deals Amazon has struck to place ads on top streaming video platforms, combined with The Trade Desk's drop in revenue growth, it seems like it's taking market share.
That said, the stock is now down 73% from its high reached in late 2024. That puts its forward P/E ratio under 21 and its enterprise value-to-sales expectations ratio under 6. It's important to note that even if it cedes some of its market share of the "open internet," the market is still growing rapidly. The company should be able to produce revenue growth in the mid-teens for a long time, and it should show improvements in operating margin as it scales. As a result, the shares appear to be a bargain heading into 2026.
2. DataDog
DataDog reported stellar third-quarter earnings in early November, sending its shares spiking higher. But investors immediately saw the stock collapse, dropping through November and December. The stock now trades 30% lower than it did just after its earnings release last month. One of the biggest culprits may have been insider selling, as directors and executives unloaded a large amount of stock at the elevated price. That was exacerbated by the announced acquisition of Chronosphere by Palo Alto Networks, increasing its competitive pressure on the business.
But those factors may only put temporary pressure on the stock price, giving retail investors a great opportunity to buy shares today. After all, the third-quarter earnings paint a rosy picture for the business in 2026. Not only did revenue increase by 28%, but remaining performance obligations also rose by 53%, indicating a long runway of growth.
NASDAQ: DDOG
Key Data Points
DataDog is showing particular momentum with its AI efforts. It says it has over 500 native AI customers using its tools to observe operational performance for their large language models and generative AI apps. It recently signed a nine-figure deal with a leading AI company, management said on the third-quarter earnings call. Additionally, its BitsAI agents are able to investigate and mitigate issues, and propose code changes for software engineers to resolve them. Management reports that it has seen very strong interest in BitsAI so far.
Importantly, the growing number of businesses using cloud computing to host their software and utilizing additional cloud-based software is generating a substantial amount of data. As a result, the total addressable market for DataDog and other observability platforms is growing quickly. While DataDog stock remains expensive, with a forward P/E of 69 and a price-to-sales ratio of 14, the growth opportunity ahead should make it worth the price. The pullback over the last two months could be a great opportunity for investors.
