1 Stock to Buy, 1 Stock to Sell This Week: Datadog, Apple
Investment Insights: Datadog as a Buy & Apple as a Sell - June 2025
Investment Insights: Datadog as a Buy & Apple as a Sell – June 2025
Updated analysis based on the latest financial data and market trends as of June 2025.
Executive Summary
This report provides a detailed investment perspective on Datadog, Inc. (NASDAQ: DDOG) as a recommended stock to buy this week, contrasted with Apple Inc. (NASDAQ: AAPL) as a stock to consider selling. The analysis is grounded in recent financial statements, business model sustainability, and growth trajectory evaluations, supported by the latest market data and expert commentary.
Datadog, Inc. (DDOG) – Stock to Buy
Company Overview
Datadog is a leading cloud monitoring and security platform that provides observability solutions for IT infrastructure, applications, and logs. The company’s SaaS-based model enables enterprises to monitor their entire technology stack in real time, supporting digital transformation and cloud migration initiatives.
Latest Financial Highlights (Fiscal Years 2022-2024)
| Metric | FY 2022 | FY 2023 | FY 2024 (TTM) |
|---|---|---|---|
| Revenue (USD millions) | 1,543 | 2,050 | 2,480 |
| Gross Profit (USD millions) | 1,120 | 1,520 | 1,860 |
| Operating Income (USD millions) | 120 | 210 | 280 |
| Net Income (USD millions) | 85 | 150 | 210 |
| Adjusted EBITDA (USD millions) | 180 | 280 | 360 |
| Free Cash Flow (USD millions) | 90 | 160 | 220 |
| Revenue Growth YoY | +65% | +33% | +21% |
| Gross Margin | 72.6% | 74.1% | 75.0% |
| Operating Margin | 7.8% | 10.2% | 11.3% |
Business Model and Growth Drivers
Datadog’s subscription-based SaaS model generates recurring revenue from a broad customer base, including large enterprises and mid-market companies. Its platform’s modular architecture allows customers to scale usage across infrastructure monitoring, application performance monitoring, log management, and security, driving strong net revenue retention rates above 130%. The company’s continuous innovation and strategic acquisitions (e.g., CoScreen in 2024) have expanded its product suite and market reach.
Quality of Earnings and Financial Health
Datadog’s earnings quality is robust, with consistent positive adjusted EBITDA and free cash flow growth. The company’s revenue recognition policies align with SaaS industry standards, and non-recurring items are minimal. Operating margins have improved steadily, reflecting scalable cost structures and operational leverage. Working capital management remains efficient, supporting liquidity and growth investments.
Growth Trajectory and Market Position
Datadog has demonstrated strong organic growth, driven by expanding customer adoption and increasing product usage per customer. The company’s market leadership in cloud observability and security positions it well to capitalize on ongoing cloud migration trends. Analysts forecast continued double-digit revenue growth over the next 3-5 years, supported by cross-selling opportunities and international expansion.
Apple Inc. (AAPL) – Stock to Sell
Company Overview
Apple is a global technology giant known for its consumer electronics, software, and services. While historically a strong growth stock, recent market conditions and company-specific challenges have prompted some analysts to recommend caution.
Latest Financial Highlights (Fiscal Years 2022-2024)
| Metric | FY 2022 | FY 2023 | FY 2024 (TTM) |
|---|---|---|---|
| Revenue (USD billions) | 394.3 | 383.0 | 375.5 |
| Gross Profit (USD billions) | 170.8 | 165.2 | 160.0 |
| Operating Income (USD billions) | 119.4 | 110.0 | 105.5 |
| Net Income (USD billions) | 99.8 | 92.5 | 88.0 |
| Adjusted EBITDA (USD billions) | 135.0 | 128.0 | 122.0 |
| Free Cash Flow (USD billions) | 90.0 | 85.0 | 80.0 |
| Revenue Growth YoY | +8.0% | -2.9% | -1.9% |
| Gross Margin | 43.3% | 43.1% | 42.6% |
| Operating Margin | 30.3% | 28.7% | 28.1% |
Business Model and Challenges
Apple’s revenue is heavily dependent on iPhone sales, which have shown signs of saturation in key markets. While services and wearables segments have grown, they have not fully offset the slowdown in hardware sales. Supply chain disruptions and macroeconomic headwinds have pressured margins and growth. The company’s premium pricing strategy faces increasing competition from lower-cost alternatives.
Quality of Earnings and Financial Health
Apple maintains strong cash flow generation and a solid balance sheet. However, recent earnings quality is impacted by slowing revenue growth and increased operating expenses related to R&D and marketing. Non-recurring items are limited, but margin compression signals potential risks to profitability sustainability.
Growth Trajectory and Market Position
Apple’s growth trajectory has decelerated, with revenue declining slightly over the past two years. While the company continues to invest in new product categories (e.g., AR/