Navigating the AI Shift: Wall Street’s Picks for Long-Term Growth
Recent market volatility, fueled by concerns over artificial intelligence disruption, has prompted some investors to reassess their portfolios. However, analysts believe opportunities remain for those willing to look beyond the immediate noise. Focusing on companies with strong fundamentals and long-term potential, as identified by top Wall Street pros, can be a savvy strategy.
Datadog: Securing the Observability Edge in an AI World
Artificial intelligence isn’t just disrupting industries; it’s also increasing the complexity of IT infrastructure. Datadog (DDOG) is capitalizing on this trend with its AI-powered observability and security platform. Following a recent Investor Day event, Baird analyst William Power reiterated a buy rating, citing the company’s commitment to achieving an adjusted operating margin of over 25% while continuing to invest in future growth.
Power highlights strong demand for Datadog’s existing products, alongside growing opportunities in areas like AI, logs, developer tools, and security. The company’s strength lies in its contextual data, providing a significant advantage over competitors as enterprises grapple with increasingly complex IT stacks. Datadog is uniquely positioned to address enterprise security needs, currently serving approximately 8,500 security customers, including 70% of those with over $1 million in annual recurring revenue (ARR).
Despite already having a substantial customer base, security currently represents only 2% of total ARR from large customers, indicating a significant expansion opportunity. Analyst William Power, ranked No. 459 among over 12,100 analysts tracked by TipRanks, has a 55% success rate with an average return of 15.8%.
Vertiv Holdings: Powering the AI Infrastructure Boom
The surge in AI development is driving unprecedented demand for data center infrastructure. Vertiv Holdings (VRT) provides critical power and cooling solutions to these data centers, and recent results demonstrate the strength of this demand. The company’s organic orders surged 252% in the fourth quarter of 2025, leading to a recent stock rally.
Bank of America analyst Andrew Obin reiterated a buy rating on VRT, raising the price target to $277 from $250, citing continued strong order growth. Vertiv expects this momentum to continue into 2026, with CEO Giordano Albertazzi noting a robust pipeline even after fulfilling numerous large orders in the fourth quarter of 2025. Obin projects a 5% order growth in 2026, adding $5 billion to the backlog, a 33% year-over-year increase.
Beyond the core business, Vertiv is focusing on strategic deals with key players like Nvidia (NVDA) and Caterpillar (CAT), as well as developing prefabricated product solutions. Analyst Andrew Obin, ranked No. 87 by TipRanks, boasts a 70% success rate and an average return of 19.2%.
Arista Networks: Maintaining Dominance in AI Networking
Arista Networks (ANET) provides essential networking solutions for large AI and data center environments. Despite a recent stock dip following an announcement regarding Nvidia supplying Meta Platforms with GPUs, CPUs, and networking solutions, Needham analyst Ryan Koontz believes this will have minimal impact on Arista’s strong supplier position with Meta.
Koontz reiterated a buy rating with a price target of $185, emphasizing that the Nvidia-Meta deal primarily involves network interface cards (NICs) that connect to Arista’s spine and scale-across networks. He estimates Meta accounted for 16% of Arista’s 2025 revenue and industry checks confirm Arista remains a dominant supplier for Meta’s AI back-end infrastructure.
The deal aligns with a similar announcement from the Open Compute Project (OCP) conference in October 2025, indicating it’s a continuation of existing trends rather than a disruptive shift. Analyst Ryan Koontz, ranked No. 277 by TipRanks, has a 51% success rate and an average return of 24.7%.
Frequently Asked Questions
Q: What is “observability” in the context of Datadog?
A: Observability refers to a system’s ability to understand its internal state from its external outputs, allowing for better monitoring, troubleshooting, and optimization.
Q: Why is power and cooling so critical for AI infrastructure?
A: AI workloads require significant computational power, which generates substantial heat. Effective power and cooling solutions are essential to maintain performance and prevent system failures.
Q: What is a network interface card (NIC)?
A: A NIC is a hardware component that connects a computer to a network, enabling communication between devices.
Did you know? The demand for data center infrastructure is projected to grow exponentially in the coming years, driven by the increasing adoption of AI and cloud computing.
Pro Tip: Diversifying your portfolio across different sectors, including those benefiting from the AI revolution, can help mitigate risk and maximize potential returns.
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