The artificial intelligence boom is expected to continue its momentum into 2026, following a year in which notable AI stocks like Nvidia and Palantir Technologies significantly outperformed the broader market. As investors look ahead, opportunities may arise in less obvious sectors of the AI industry. Analysts from The Wall Street Journal recommend SentinelOne and Datadog, pointing to their potential for substantial returns in the coming year.
SentinelOne has developed a cybersecurity platform that leverages AI for automating tasks ranging from threat detection to incident response. According to the company, enterprise security teams face over 1,000 threat alerts daily, and traditional human-led processes are often insufficient. Their Singularity platform employs AI to not only detect alerts but also to respond to incidents autonomously, relieving the burden on security teams.
Recently, SentinelOne introduced an enhanced version of its integrated AI-powered virtual assistant, named Purple AI Athena. This tool is designed to function like a seasoned security analyst, addressing security issues at machine speed and autonomously implementing solutions. This upgrade aims to bolster the capabilities of existing teams by acting as an additional resource.
As of its fiscal 2026 third quarter, which concluded on October 31, SentinelOne reported revenue of $258.9 million—an increase of 23% year-over-year. This growth is expected to propel the company toward achieving over $1 billion in annual revenue for the first time during its fiscal year ending January 31, 2026. Analysts covering the stock remain optimistic, with 23 out of 39 rating it as a buy and a consensus price target of $21.41, indicating a potential upside of 42% in the next 12 to 18 months. A more ambitious Street-high target of $30 suggests the stock could double in value.
In comparison, Datadog has also carved out a niche in AI, focusing on cloud monitoring. The company has developed a suite of tools designed to help businesses manage their digital infrastructure, especially crucial as more operations shift online. In 2024, Datadog launched LLM Observability, a product that assists developers in troubleshooting issues and tracking expenditures while building large language models (LLMs). This feature ensures that the models generate accurate outputs for users.
Datadog has also rolled out an advanced AI assistant, Bits AI, integrated into its various platforms. This assistant autonomously investigates alerts and diagnoses technical issues, effectively reducing downtime even further than Datadog’s existing offerings. The company had approximately 32,000 customers by the end of the third quarter of 2025, with around 5,000 utilizing its AI products—an increase of 67% from the previous year. Revenue from AI-native customers doubled during the quarter, making up a record 12% of its total revenue of $886 million.
Analysts remain bullish on Datadog as well, with 35 out of 48 recommending the stock as a buy. The average price target stands at $214.67, suggesting a potential increase of 57% over the next year and a half, while a Street-high target of $260 indicates a possible upside of 91%.
As the new year approaches, both SentinelOne and Datadog appear well-positioned to capitalize on the growing demand for AI solutions. With the cybersecurity landscape becoming increasingly complex and businesses relying more on digital infrastructure, investments in these companies could prove advantageous for investors looking to diversify their portfolios in 2026. The continued evolution of AI technologies promises not only enhanced operational efficiencies but also significant investment opportunities in the sector.
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