Key Takeaways
- The artificial intelligence (AI) industry is expected to continue growing in 2026, with opportunities arising in less-obvious areas.
- SentinelOne and Datadog are two AI stocks that have significant potential upside, with the majority of analysts recommending investment.
- SentinelOne’s cybersecurity platform uses AI to automate threat detection and incident response, easing the burden on human security teams.
- Datadog’s cloud monitoring platform helps businesses manage their digital infrastructure, and its AI products are in high demand.
- Both stocks have a strong potential for growth, with SentinelOne’s price target implying a 42% upside and Datadog’s implying a 57% upside.
Introduction to AI Industry Growth
The artificial intelligence boom is poised to continue in 2026, with the industry expected to grow and evolve in new and exciting ways. As quoted in the original article, "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." During 2025, AI stocks like Nvidia and Palantir Technologies outperformed the broader market, and it’s likely that this trend will continue. However, some of the most significant gains may come from lesser-known companies that are making significant contributions to the industry.
The Case for SentinelOne
SentinelOne is one such company, with its cybersecurity platform using AI to automate everything from threat detection to incident response. As the company notes, "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." SentinelOne’s Singularity platform detects and investigates alerts using AI, thwarts potential attacks at machine speed, and autonomously responds to critical incidents in the event of a breach. The company has also launched an upgraded version of Singularity’s integrated AI-powered virtual assistant, called Purple AI Athena, which is capable of reasoning its way through security problems at machine speed and autonomously implementing solutions.
SentinelOne’s Financial Performance
SentinelOne’s financial performance has been strong, with the company generating $258.9 million in revenue during its fiscal 2026 third quarter, representing a year-over-year increase of 23%. The company is on track to deliver over $1 billion in annual revenue for the first time ever, and the majority of analysts tracked by The Wall Street Journal recommend investing in the stock. The consensus price target is $21.41, which implies a potential upside of 42% over the next 12 to 18 months. As the article notes, "I think those price estimates are realistic, because SentinelOne is one of the cheapest stocks in the cybersecurity space."
The Case for Datadog
Datadog is another company that is making significant contributions to the AI industry. The company’s cloud monitoring platform helps businesses manage their digital infrastructure, and its AI products are in high demand. As the article notes, "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’s LLM Observability product helps developers identify technical issues and track expenditures when building large language models, which sit at the foundation of most AI software applications. The company’s advanced AI assistant, Bits AI, can autonomously investigate alerts, diagnose technical issues, and even suggest potential solutions.
Datadog’s Financial Performance
Datadog’s financial performance has been strong, with the company’s revenue from AI-native customers doubling during the third quarter of 2025. The company had around 32,000 customers at the end of the quarter, with around 5,000 using at least one of its AI products. The majority of analysts tracked by The Wall Street Journal recommend investing in the stock, with a consensus price target of $214.67, which implies a potential upside of 57% over the next 12 to 18 months. As the article notes, "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."
Conclusion and Future Outlook
In conclusion, the AI industry is expected to continue growing and evolving in 2026, with opportunities arising in less-obvious areas. SentinelOne and Datadog are two companies that are making significant contributions to the industry, with strong financial performance and significant potential upside. As the article notes, "the case for SentinelOne and Datadog is clear, and investors would be wise to consider adding these stocks to their portfolios in the new year." With the majority of analysts recommending investment and strong price targets, these stocks are likely to be a great addition to any diversified portfolio.
https://www.fool.com/investing/2026/01/03/2-spectacular-ai-stocks-buy-hand-2026-wall-street/