Two Undervalued AI Stocks That Analysts Believe Could Deliver Substantial Returns

The artificial intelligence investment boom has dominated market gains in recent years, yet certain AI stocks remain underpriced according to major Wall Street research firms. Two companies that caught analysts’ attention are The Trade Desk and Datadog, both utilizing cutting-edge AI technology to solve critical business challenges. Research teams at prominent investment banks recently issued bullish forecasts for these overlooked opportunities.

What Wall Street Analysts See in These AI Stocks

Major financial institutions have identified potential in companies that leverage artificial intelligence to enhance their core services. Mark Kelley’s team at Stifel recently established The Trade Desk’s price target at $74 per share, suggesting potential upside of 196% from its reference level. Meanwhile, Brian White at Monness set Datadog’s target at $255 per share, implying 112% upside potential. Notably, even analysts who don’t expect triple-digit returns in the near term view both AI stocks as trading below their intrinsic value.

JPMorgan Chase reports that AI-related securities have represented roughly three-quarters of the S&P 500’s total returns since the generative AI revolution began in late 2022. Despite this concentration, research teams continue identifying pockets of value within the broader artificial intelligence sector.

The Trade Desk: AI-Powered Advertising Platform With Structural Advantages

The Trade Desk operates an independent adtech platform designed to help media buyers optimize digital advertising campaigns across the open internet. The company’s technology stack relies on artificial intelligence to evaluate advertising impressions, customize bidding strategies, and continuously refine targeting approaches based on performance analytics.

A critical competitive advantage sets this AI stock apart: independence from content ownership. Unlike rivals such as Alphabet’s Google or Amazon, which own valuable media properties like YouTube and Prime Video, The Trade Desk maintains vendor neutrality. This structural difference matters significantly—publishers prove more willing to share data with neutral platforms, which strengthens the effectiveness of AI-driven targeting and measurement capabilities.

The Trade Desk commands the leading market position for connected TV advertising, one of the fastest-growing digital advertising segments. However, investor concerns about how generative AI might disrupt ad spending have pressured the valuation significantly. Despite these worries, Wall Street’s consensus target price of $50 implies 100% upside potential. Analysts note that expected earnings growth of roughly 13% annually through 2026 supports a relatively modest valuation multiple compared to peer valuations across the broader market.

Datadog: AI-Enabled Observability and Security for Enterprises

Datadog develops software that consolidates monitoring data from entire enterprise technology environments—infrastructure, applications, and services—into unified dashboards. The platform’s embedded artificial intelligence engine, called Watchdog, automatically detects irregularities, generates incident alerts, and performs root cause diagnostics to accelerate issue resolution.

Independent research organizations consistently rank Datadog as a market leader. Gartner identifies the company as a top player in digital experience monitoring and observability solutions, sectors projected to grow at 16% annually through 2030. Forrester Research similarly recognizes Datadog as a leader within AI for IT operations, a category expected to expand 15% annually over the same timeframe.

According to Morgan Stanley’s analysis, Datadog has captured the most market share gains within its core observability segment because IT departments increasingly prioritize consolidated platforms that replace fragmented point solutions. The company has expanded its portfolio by introducing AI-powered monitoring for machine learning applications and rolling out intelligent agents that automate incident resolution workflows.

With adjusted earnings growth reaching 20% in recent quarters, the valuation multiple approaches 60 times earnings—a meaningful premium. However, substantial research and development investments position the company for potential earnings acceleration. Wall Street’s median price target of $180 implies 50% upside from current reference levels.

Investment Perspective: Why These AI Stocks Deserve Investor Attention

Both companies represent different facets of the artificial intelligence opportunity. The Trade Desk provides essential infrastructure for the independent digital advertising ecosystem, while Datadog supplies critical tools for managing increasingly complex enterprise technology environments. Their market positions benefit from structural tailwinds—rising streaming adoption for connected TV and accelerating digital transformation initiatives driving observability adoption.

While analysts acknowledge that triple-digit annual returns remain unlikely, the combination of reasonable valuations relative to growth trajectories, strong competitive positioning, and expanding addressable markets makes both AI stocks worthy of consideration for investors seeking exposure to artificial intelligence’s practical applications in enterprise software and advertising technology. Both companies demonstrate how AI technologies enhance existing business models rather than representing speculative bets on emerging sectors.