During 2025, artificial intelligence (AI) stocks like Nvidia and Palantir Technologies comfortably outperformed the broader market. But a new year can bring new opportunities, and some of the best returns in 2026 might come from the less-obvious areas of the AI industry.
SentinelOne (S 2.68%) built a cybersecurity platform that uses AI to automate everything from threat detection to incident response. Datadog (DDOG 0.28%), on the other hand, designed a series of tools to help accelerate the pace of AI development, and they are going to be in high demand as the industry matures.
The majority of the analysts tracked by The Wall Street Journal recommend investing in SentinelOne and Datadog, and their consensus price targets point to significant potential upside during 2026.
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The case for SentinelOne
According to SentinelOne, the average enterprise security team experiences over 1,000 threat alerts every single day that require manual investigation, and human-led processes simply can't keep up. The company's Singularity platform detects and investigates alerts using AI, thwarts potential attacks at machine speed, and autonomously responds to critical incidents in the event a breach is successful. These attributes ease the burden on human security teams.
Last year, SentinelOne launched an upgraded version of Singularity's integrated AI-powered virtual assistant. It's called Purple AI Athena, and it's capable of reasoning its way through security problems at machine speed, and autonomously implementing solutions. It's designed to think like a seasoned security analyst, so it doesn't just enhance the abilities of existing employees -- it's like having an extra team member entirely.
NYSE: S
Key Data Points
SentinelOne generated $258.9 million in revenue during its fiscal 2026 third quarter (ended Oct. 31). It represented a year-over-year increase of 23%, which was an acceleration from the 22% growth it produced in the second quarter three months earlier. The company is officially on track to deliver over $1 billion in annual revenue for the first time ever during its fiscal year 2026 (which ends on Jan. 31), marking a very positive milestone.
The Wall Street Journal tracks 39 analysts who cover SentinelOne stock, and 23 have given it a buy rating, and none recommend selling. Their consensus price target is $21.41, which implies a potential upside of 42% over the next 12 to 18 months, but the Street-high target of $30 suggests the stock could soar by 100% instead.
I think those price estimates are realistic, because SentinelOne is one of the cheapest stocks in the cybersecurity space. Its price-to-sales (P/S) ratio of 5.1 represents a steep discount to the valuations of CrowdStrike, Palo Alto Networks, and Zscaler, which also offer AI-powered cybersecurity tools.
CRWD PS Ratio data by YCharts
As a result, this could be a great AI stock for investors to buy as the new year gets underway.
The case for Datadog
Many businesses have shifted their operations and sales channels online over the past decade, allowing them to improve efficiency and reach a global customer base. Datadog developed a cloud monitoring platform to help them manage their digital infrastructure, and reduce costly downtime that often negatively impacts their customers.
Datadog now offers similar products for AI developers. In 2024, it launched LLM Observability, which helps developers identify technical issues and track expenditures when building large language models (LLMs), which sit at the foundation of most AI software applications. LLM Observability also constantly monitors the quality of a model's outputs, to ensure it produces accurate information for end users.
Datadog also offers an advanced AI assistant called Bits AI, which integrates into its various product platforms. It can autonomously investigate alerts, diagnose technical issues, and even suggest potential solutions. This not only saves human workers a significant amount of time, but it also reduces digital infrastructure downtime even further than Datadog's original product suite.
NASDAQ: DDOG
Key Data Points
Datadog had around 32,000 customers at the end of the third quarter of 2025 (ended Sept. 30). Around 5,000 of them were using at least one of its AI products, and that number was up by a whopping 67% compared to the year-ago period. The company's revenue from AI-native customers also doubled during the quarter, and accounted for a record-high 12% of its total revenue of $886 million.
The Wall Street Journal tracks 48 analysts who cover Datadog stock, and 35 rate it a buy, while none recommend selling. They have an average price target of $214.67, which suggests the stock could climb by 57% over the next 12 to 18 months, and the Street-high target of $260 points to an even bigger potential upside of 91%.
Based on the incredible momentum in Datadog's AI business, I think its stock could be a great addition to any diversified portfolio this year.
