Software Bear Market: 2 AI Stocks to Buy Before They Soar 102% and 170%, According to Wall Street Analysts

The S&P North American Technology Software Index, which tracks 111 bundle stocks, has fallen 24% from the grounds precocious it reached successful September 2025. That puts the scale successful carnivore marketplace territory. Investors are disquieted that artificial quality (AI) coding tools volition bounds request for bundle successful the future.

I deliberation the marketplace is excessively pessimistic. Morgan Stanley's fourth-quarter CIO survey suggests bundle volition beryllium the fastest-growing IT assemblage successful 2026. "CIO survey information affirms our presumption connected incumbent bundle vendors benefiting from this disruption, arsenic they volition yet service arsenic the transportation mechanism" for caller generative AI features.

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With that successful mind, definite Wall Street analysts forecast triple-digit upside successful Datadog (NASDAQ: DDOG) and Atlassian (NASDAQ: TEAM):

• Adam Shepherd astatine Arete Research precocious raised his people terms connected Datadog to $260 per share. That implies 102% upside from the existent stock terms of $129.

• Keith Weiss astatine Morgan Stanley precocious acceptable his people terms connected Atlassian astatine $320 per share. That implies 170% upside from its existent stock terms of $118.

Here's what investors should cognize astir Datadog and Atlassian.

Datadog develops observability software. Its level includes 2 twelve products that assistance businesses show the show of captious IT infrastructure and applications. It besides features an artificial quality (AI) motor called Watchdog that automates anomaly detection, incidental alerts, and basal origin investigation to assistance teams resoluteness problems much quickly.

Artificial quality should beryllium a tailwind for Datadog. Forrester Research precocious ranked the institution arsenic a person successful AI for IT operations, a exertion that uses instrumentality learning to assistance IT teams support infrastructure and applications functional. Also, Gartner has recognized its enactment successful integer acquisition monitoring and observability platforms, highlighting AI features and show monitoring for ample connection models.

Morgan Stanley expert Keith Weiss says Datadog's quality to consolidate a wide scope of show monitoring tools connected a azygous platform, thing that has go a apical precedence for galore IT departments, has made the institution "the apical stock gainer successful its halfway observability market."

Datadog reported encouraging third-quarter fiscal results that bushed estimates connected the apical and bottommost lines. Revenue accrued 28% to $886 cardinal and remaining show work (RPO) accrued 53% to $2.8 billion. Meanwhile, non-GAAP nett income roseate 20% to $0.55 per diluted share. Importantly, bottom-line maturation was little awesome than top-line maturation owed successful ample portion to dense R&D spending.