For years, big data has been quite the abstract theme for many investors who aren’t well-versed in data science. Indeed, many investors may still misunderstand what firms within the big data space bring to the table. From the analytics of massive data sets to tools that help enterprises better manage, visualize and interpret vast troves of data, there are plenty of different angles to play big data.
Undoubtedly, last year’s incredible surge in artificial intelligence (AI) companies put big data dynamos in the spotlight. In the AI age, data is a precious commodity with as much, if not more, value than your average precious metal.
Don’t count on the big data revolution slowing down to give investors a chance to understand the market better. With AI, it’s full speed ahead of big data companies, which may one day be indistinguishable from today’s top AI plays.
Let’s have a gander at a trio of my favorite big data stocks to hold for 2024.
Speaking of hot big data companies with skin in the AI game, we have Palantir (NYSE:PLTR), a former meme stock that shot up in mid-2023, only to consolidate violently into year’s end.
The once-famed meme stock is a prominent contractor for the U.S. government. Beyond its government work, the firm also hopes to grow sales with commercial customers with its Gotham platform. As AI becomes a must for corporations around the world, look for Palantir’s AI solutions to hit the ground running over the coming years.
For now, it’s tough to see exactly where Palantir stands in the early innings of the big data and AI revolutions. Jefferies (NYSE:JEF) analyst Brent Thill is concerned about Palantir stock’s valuation going into the new year. At 17 times price-to-sales (P/S), I’d say Thill has the right to be cautious, even if Palantir is one of the best of the big data batch.
Though AI is a real tailwind for Palantir, there’s also a significant risk that investors stand to overpay at over $16 per share. Remember, PLTR stock has already lifted off the tarmac, blasting off over 140% in the past year alone.
Snowflake (NYSE:SNOW) is a big data firm that’s built quite the ecosystem for itself in the years following its explosive 2020 IPO. The company doesn’t just have fantastic infrastructure for firms to manage and optimize its data sets but it also has been steadily adding to its roster of value-adding tools. Snowflake made a handful of intriguing acquisitions over the years, including the easy-to-use data app framework Streamlit.
More recently, Snowflake bought up data clean room startup Samooha. In short, Samooha helps firms share their data across the cloud safely and soundly. Data sharing and governance represent segments of the Snowflake pie that could power ample growth in the future. The deal is minor in scale but will considerably improve Snowflake’s capabilities in that corner of big data.
Like with Palantir, some analysts are souring on the data cloud company following its hot past-year run and swelling valuation. Monness Crespi Hardt’s Brian White believes Snowflake may be “overrated” regarding AI. I think there’s a good chance he’s proven wrong. Snowflake stands out as a big data dynamo and a huge beneficiary as AI takes off further.
Datadog (NASDAQ:DDOG) is coming back after the disastrous plunge of 2021/22 that caused the data monitoring firm to shed around 66% of its value from peak to trough. Over the past year, shares have surged more than 74%. And in 2024, numerous analysts are pounding the table on the firm as more firms look to invest in their data capabilities.
The company remains a leader in the market of cloud-based data observability, so says Scotiabank analysts who recently started DDOG stock with an Outperform rating. At over 19 times P/S, it’s hard not to be deterred by the valuation.
Though most analysts have high hopes and positive price targets for the year, I do think it’d be prudent for the value-conscious to wait for a pullback, perhaps to the $95 level. After all, it is one of the pricier SaaS (Software as a Service) firms on the market after its recent run.
On the date of publication, Joey Frenette owned shares of SNOW. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.