The Nasdaq Composite (^IXIC 1.78%) briefly dropped into bear market territory last year when President Trump started imposing tariffs, but the technology-heavy index quickly entered a new bull market because of persistent excitement about artificial intelligence.
Since 1990, the Nasdaq has been through six other bull markets. The average one lasted for five years, during which the index returned 31% annually. That hints at substantial upside in 2026. Investors can lean into that possibility by owning shares of Meta Platforms (META 2.52%) and Datadog (DDOG 0.28%).
Here's what you should know about these artificial intelligence stocks.
Image source: Getty Images.
Meta Platforms: 29% upside implied by Wall Street's median target price
Meta Platforms owns three of the four most popular social media networks as measured by monthly active users. Applications like Facebook and Instagram afford the company deep insight into consumer preferences, which continuously inform content recommendations and ad targeting decisions. Meta is the second largest ad tech company in the world, and it is positioned to gain market share, according to Morningstar.
Meta has been spending heavily on artificial intelligence (AI) product development. Custom chips reduce its dependence on costly Nvidia GPUs, proprietary machine learning models personalize the user experience, and AI creative tools automate campaign workflows for brands. Those efforts have led to deeper engagement and better ad performance, allowing the company to charge more per ad impression.
Also noteworthy, the conversational assistant Meta AI has accumulated more than 1 billion monthly active users. That provides the company with yet another way to collect valuable user data to inform content recommendations and ad targeting. Additionally, Meta integrates its AI assistant with smart glasses, which could be a substantial opportunity in the years ahead.
Meta reported encouraging financial results in the third quarter. Revenue increased 26% to $51 billion and GAAP net income (excluding a one-time tax charge) increased 20% to $7.25 per diluted share. Nevertheless, the stock dropped sharply following the report because Meta announced plans to spend more aggressively on AI product development in 2026.
The stock is currently 18% below its record high, which creates an opportunity for patient investors. Meta trades at 29 times earnings, a very reasonable price for a company whose earnings increased 20% in the most recent quarter. Indeed, among 71 analyst, Meta has a median target price of $840 per share. That implies 29% upside from its current share price of $650.
NASDAQ: META
Key Data Points
Datadog: 62% upside implied by Wall Street's median target price
Datadog develops observability and security software that helps enterprises monitor the performance of critical applications and infrastructure. The company has embedded its products with machine learning capabilities. Watchdog is an AI engine that proactively detects anomalies, surfaces alerts, and automates root cause analysis, and every data points improves its ability to complete those tasks.
Last year, consultancy Gartner ranked Datadog as a leader in observability platforms and digital experience monitoring tools. One reason the company has been so successful is that it consolidates dozens of observability and security tools on a single platform, freeing customers from the complexity of integrating products from different vendors.
Importantly, Datadog has leaned into demand for generative AI with LLM Observability, a performance monitoring module that ensures large language models are working properly. The company has also introduced Bits AI agents that autonomously investigate alerts, suggest code fixes, and review security signals to help IT teams resolve incidents.
Datadog report solid financial results in the third quarter. Revenue increased 28% to $886 million as the company won new customers and existing customers used more products. The average spend per existing customer increased about 20%. CEO Olivier Pomel also mentioned high interest in the new Bits AI agents. Meanwhile, non-GAAP earnings increased 20% to $0.55 per diluted share.
Datadog currently trades at 15 times sales, a discount to the three-year average of 16.9 time sales and a reasonable valuation for a company whose revenue is forecast to grow at 21% annually through 2027. Indeed, among 48 analysts, the median target price is $216 per share. That implies 62% upside from its current share price of $133.
