Jim Cramer examined business software company Datadog’s rally on Tuesday, saying that tech stock gains aren’t over and that the company’s success signals good news for its peers.
“You had to be curious to see what Datadog had to say. You couldn’t be dogmatic, trapped in negativity,” Cramer said. Cramer said. “You had to believe in the bowling, the pin action that could come from hitting the front pin of the tech phalanx.”
Datadog’s shares surged nearly 30% after its quarterly report on Tuesday beat Wall Street’s earnings estimates and the company raised its full-year guidance, boosting peers such as MongoDB and Snowflake. Cramer said the stock’s success also boosted well-known partners such as Meta, Shopif and ServiceNow, as well as tangential tech stocks.
Datadog builds cloud monitoring and security products for enterprises, using generative artificial intelligence. Cramer said companies may be realising they can’t afford to stay away from spending on artificial intelligence and cybersecurity.
Cloud software companies such as Datadog have seen sales slow this year as many customers have taken cost-cutting measures. But the company’s CEO suggested on Tuesday that customers’ optimisation efforts may be easing. Cramer said this change in Datadog’s customers’ habits could mean fewer problems for other tech and enterprise software companies.
According to Cramer, today’s tech rally suggests that last week’s market gains won’t be short-lived.
“I think last week was a transformational moment for the stock market – I’ve been saying that every single day – and if you haven’t changed your mind to adjust to the new reality, I think there’s a chance you’re going to be left behind,” he said. “Oh, there will be dips – tomorrow, I don’t know – but increasingly those dips are going to be more buying than selling as we go towards the end of the year.”
