Qualcomm just put a bold marker down in AI and data center technology, lifting its 2029 non-handset revenue target to $40b and outlining fresh ambitions in data center CPUs and AI software. When a company of Qualcomm’s size resets expectations and lands a customer like Meta for its new Dragonfly C1000 chip, it can reshape how investors look at related stocks. This article walks through 3 stocks from an AI and data center screener that are closely tied to these developments, helping you evaluate which exposures might fit your portfolio goals and which may call for extra caution.

Coherent (COHR)

Overview: Coherent is a US-based photonics company that supplies the laser systems, optical components, and high speed networking hardware that sit at the heart of AI data centers, communications networks, and advanced manufacturing. Its three segments, Networking, Materials, and Lasers, serve customers across datacenter, telecom, electronics, industrial, and scientific markets.

Operations: Coherent reports a business segment adjustment of about US$6.6b, with geographic exposure led by North America at roughly US$4.2b, followed by Europe at about US$0.8b, China at US$0.7b, Japan at US$0.4b, and the Rest of World at about US$0.5b.

Market Cap: US$74.6b

Investors watching Qualcomm’s push into AI data centers may find Coherent particularly interesting because it supplies the high speed optical hardware that moves data between those AI chips, and it already has deep ties to Nvidia and other large customers. Some analysts highlight the potential for revenue and earnings growth as AI datacenter demand and Apple related contracts develop, while CHIPS Act funding and new US manufacturing capacity are also being watched as possible supports for margins and supply chain resilience. At the same time, the stock is priced for strong execution, with high expectations, external borrowing, customer concentration, and rising competition in optical transceivers all adding risk. How those trade offs play out will be important for Coherent’s long term return potential for AI focused investors.

Coherent’s AI datacenter story looks powerful, but the real tension is whether those expectations line up with its fundamentals, customer mix, and capital structure. The 2 key rewards and 3 important warning signs may reveal this in a surprising way.

Datadog (DDOG)

Overview: Datadog helps companies keep their cloud applications running smoothly and securely by collecting and analyzing data from servers, databases, apps, AI models, and security tools in one observability and security platform.

Operations: Datadog generates about US$3.7b in revenue from Information Technology (IT) Infrastructure, with around US$2.5b coming from the United States and roughly US$1.0b from international customers.

Market Cap: US$78.5b

Datadog is central to the AI story because every new Qualcomm powered data center and GPU cluster still needs tight monitoring, cost control, and security, and Datadog’s platform is built to do exactly that. Revenue is forecast to grow faster than the broader US market, earnings are expected to grow strongly over the next 3 years, and recent Q1 results showed revenue up 32.2% with more than 240 enterprise customers now paying over US$100k. At the same time, the stock trades on a high P/S multiple, profit margins have slipped from last year, insider selling has been significant, and management pay has risen even as near term earnings declined. How those strengths and pressure points balance out is what really matters for Datadog’s long term return potential.

Datadog’s 32.2% revenue growth and expanding US$100k customer base suggest momentum that the headline P/S ratio might not fully explain. For more context on that combination of growth, margins, and insider activity, see the analysis report for Datadog

Dynatrace (DT)

Overview: Dynatrace provides an AI powered observability platform that helps large organizations monitor, secure, and automate their cloud and AI driven systems, so they can quickly spot issues and keep critical digital services running. It sells this software, along with consulting and training, to customers across industries such as banking, government, insurance, retail, transportation, and software.

Operations: Dynatrace generates about US$2.0b in revenue from Internet Software & Services, with roughly US$927.7m from the United States and the rest spread across Europe, the Middle East and Africa, Asia Pacific, Latin America, and the rest of North America.

Market Cap: US$11.8b

Dynatrace sits in the slipstream of Qualcomm’s AI data center push, because all those new AI workloads still need observability, automation, and security across complex cloud environments. Its AI powered platform, high quality earnings, and forecast earnings growth above 20% a year are attracting attention, while an activist shareholder is pressing for better margins and buybacks. On the flip side, the stock trades on a rich P/E multiple, recent net margins fell sharply from prior levels, and revenue growth is projected to be only slightly below the broader US market. For investors, the key question is whether Qualcomm driven AI demand and Dynatrace’s execution can justify that premium.

Dynatrace’s premium P/E and activist pressure suggest something important is brewing beneath the headline growth story, and the analyst forecasts for Dynatrace hints at where expectations and reality may quietly diverge next

The three stocks in this article are just a starting point, and the full AI and Data Center Technology screener surfaces 80 more companies tied to AI chips, data centers, and related software with equally compelling stories waiting to be unpacked. Use Simply Wall St to identify and analyze the exact catalysts, financial traits, and narratives that matter to you so you can focus on the highest conviction ideas in this space.

Take Control of Your Investment Journey

If Datadog or any of these companies sound like a great opportunity, register for FREE with Simply Wall St and add your companies to a Watchlist to monitor the share price against the fair value the ideal entry point. Once you've made your move, manage your holdings with our Portfolio Command Center that filters out the noise to deliver only the most critical, actionable updates. Throughout your journey, our Community allows you to filter the best ideas from thousands of investor perspectives. By uncovering hidden catalysts and risks early, you'll accelerate your decision-making and stay one step ahead of the market.

Seeking Fresh Alternatives Before They Fly

Fresh breakout stories are forming while others are already flying. The best entry points can drop out of reach fast, so it can help to look under the radar now to consider getting in early.

• Spot potential turnarounds early by scanning the 18 high quality undiscovered gems that highlight financially strong companies still flying under most investors’ screens.
• Follow income-oriented trends by checking the 7 dividend fortresses that focus on businesses working to sustain high yields while prices may still be catching up.
• Track resilient growth stories by reviewing the 70 resilient stocks with low risk scores curated to surface stocks with steadier profiles while it still matters, before momentum fully builds.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.