Even though 2024’s drawing to a close, my hunt for the best shares to buy continues. There are plenty of bargains and opportunities to be found on the London Stock Exchange. But this month, my attention’s being drawn to two American tech businesses, specifically Okta (NASDAQ:OKTA) and Datadog (NASDAQ:DDOG).
Both companies have had their ups and downs in recent years. And like many high-flying tech stocks, share price volatility‘s been plentiful. Yet, both seemingly have a lot of potential to offer.
A cybersecurity comeback story?
Out of these two stocks, Okta has definitely been the more disappointing performer. While shares are up a respectable 13% over the last 12 months, the stock’s still trading firmly below its peak 2021 levels. The drop in valuation’s partly due to the recent stock market correction.
But Okta landed in particularly hot water after suffering a security breach. Needless to say, that’s not a good look for a cybersecurity business specialising in identity verification.
The security flaw’s since been rectified. And management appears to have done a good job getting the ship back on course. In fact, its latest results actually beat expectations with double-digit revenue growth and delivering net profits for the first time.
Pairing this with the announcement of new artificial intelligence (AI) features that can detect and take action against unusual activity, Okta seems to be in a much stronger position. In terms of competition, the biggest threat appears to be Microsoft, which has far deeper pockets. And Okta’s also still dealing with some legal battles related to its earlier data breaches that could end unfavourably.
However, its actual technology continues to be rated one of the best solutions in the world by customers, according to Gartner Peer Insights. So while there’s a notable risk, the long-term potential of this business remains intact. That’s why I think it might be among the best shares for investors to consider buying now, providing they’re comfortable with risk.
AI tailwinds for Datadog
In a separate region of cybersecurity, Datadog’s already leveraging AI to fuel its growth. Its latest results far exceeded analyst projections, delivering 26% revenue growth.
Its leadership reputation within the data observability space is attracting new customers into the fold while simultaneously encouraging existing customers to spend more. In fact, the number of clients contributing more than $100,000 in annual recurring revenue has now hit 3,490, which is up from 3,130 a year ago.
With that in mind, it’s not so surprising that Datadog’s share price has fared far better than Okta’s, rising by 40% in the last 12 months and 315% over the last five years. However, with AI spending expected to continue increasing next year along with new product launches, this might be the tip of the iceberg.
However, just like Okta, Datadog isn’t short on competition chasing the same opportunities. And management’s some regulatory threats to contend with as well. Regulatory changes surrounding data, privacy, and security could introduce new compliance complications as well as restrict platform capabilities.
Nevertheless, I remain optimistic about the long-term growth potential, even with these risks. That’s why I’ve already added some more shares to my portfolio this month.
