Potentially Soaring AI Stocks to Consider for the Second Half of 2025

AI stocks are struggling in 2025, but Datadog and Confluent suggest potential for hope. Analysts believe AI adoption will grow significantly, with Datadog boosting its forecast and Confluent’s crucial role in data streaming for AI applications. Despite recent turmoils, these stocks might soar in the second half of the year – but investors should tread carefully and stay informed.

Artificial Intelligence (AI) stocks stumbled in the first half of 2025, leaving investors scratching their heads. The uncertainty surrounding a trade war and shifting AI spending has prompted profit-taking in companies that thrived in 2023 and 2024. Market jitters come despite some analysts firmly believing AI adoption is only in the early stages and poised for significant growth as we look toward the latter part of this year and beyond.

According to predictions, Goldman Sachs anticipates AI technologies could lift global GDP by an eye-watering $7 trillion over time. Meanwhile, McKinsey ups the ante, estimating AI’s potential contributions to the economy could reach anywhere from $17.1 trillion to $25.6 trillion annually. Clearly, for those with a hopeful outlook, some AI stocks may be ripe for investment over the next few years.

First up is Datadog (NASDAQ: DDOG), a company focused on cloud-based observability – essentially helping businesses monitor and troubleshoot their applications. They’re seeing heightened interest in AI observability, which aids customers in spotting errors and optimizing costs in their AI models. Their Bits AI tool takes it up a notch, autonomously handling security alerts and monitoring, which could set the stage for strong growth ahead.

In a recent earnings call, CEO Olivier Pomel revealed that over 4,000 customers are using Datadog’s AI integrations. The number of clients tapping into their large language model (LLM) observability solution has doubled in mere months, helping contribute to a robust revenue boost. With forecasts adjusting upwards for 2025 and predictions of a robust growth path, there’s plenty of upside potential for Datadog’s stock, which has already climbed nearly 16% recently.

The second stock on our radar is Confluent (NASDAQ: CFLT). Despite facing a rough start this year with a nearly 19% drop in value, the company reported strong revenue increases, though some cautious guidance surrounding the macroeconomic climate has overshadowed those gains. Confluent plays a pivotal role in AI’s future, offering a cloud-based data streaming platform that helps companies harness raw data in real time, essential for developing sophisticated AI applications.

As businesses increasingly build AI models powered by continuous data streams, Confluent’s adoption rates should improve. Their customer base remained solid, increasing 20% on a year-over-year basis, even as their dollar-based net retention rate hit a healthy 117%. Analysts expect earnings growth to accelerate to 31% by 2026, and if Confluent can outperform its conservative guidance, its stock could see a nice uptick. Current projections suggest a price target of $28, giving it a nice bounce from present values.

For those mulling whether to invest $1,000 in these stocks, caution is advised. The Motley Fool, a trusted name in stock advice, pointed out their best picks, where neither of the AI stocks made the list. They’ve successfully identified stocks like Netflix and Nvidia in the past that turned into remarkable returns, which is a strong reminder about making informed choices before leaping into investments.

In the live wire world of AI stocks, Datadog and Confluent both have potential to rebound and grow as we venture deeper into 2025. Keeping close tabs on market trends and updates could be the key to unlocking substantial gains, though perhaps a bit of selective optimism is warranted with how rapidly the tech landscape is evolving.

AI stocks have faced hurdles in early 2025, yet many analysts remain optimistic about their long-term growth potential. Companies like Datadog and Confluent could play pivotal roles in this journey, branding themselves as crucial players in AI development. However, given their hiccups this year, potential investors should consider caution and conduct thorough research before investing. As we press into the latter half of 2025, the dynamics of AI adoption will be key to these stocks’ trajectories.

Original Source: www.nasdaq.com