Bank of America (BAC) just told clients which software stock it wants to own going into earnings season.
The pick is Datadog (DDOG), the cloud monitoring company that reports second-quarter results on August 6
BofA named Datadog its top software pick and kept its Buy rating. That call matters because Datadog is not a cheap stock, and the bank is asking investors to pay up right before a report that could go either way. Here is what BofA sees, and what still has to happen for the stock to reward the people buying it now.
Why Bank of America picked Datadog before its Q2 earnings Datadog sells observability software, which is the tooling companies use to watch whether their apps and cloud systems are running correctly. When a website slows down or an app breaks, observability tools are what engineers use to find the problem. BofA’s confidence comes from a pattern it found in Datadog’s data.