These two stocks have seen price declines as competitive pressure weighs on investors’ prospects.
They are both leaders in fast-growing markets with huge, totally addressable markets.
Despite setbacks and pressure, they should all see strong sales growth in the coming years.
10 stocks we like better than The Trade Desk ›
Artificial intelligence stocks, as a group, have been the driving force behind continued gains in the U.S. economy S&P500 index in 2025. Many of the world’s largest companies advancing artificial intelligence have seen their stock prices outpace broader market gains. But not every AI stock will have been a big winner in 2025.
That doesn’t mean they can’t become outperformers in 2026. In fact, now could be a great opportunity to buy two AI stocks that are down 30% and 73% respectively from their recent highs before they turn around next year. This is why it’s worth taking a closer look The Trade Bureau(NASDAQ:TTD) And DataDog(NASDAQ: DOG) now.
Image source: Getty Images.
The Trade Desk has seen its shares drop dramatically in 2025 as it faced both internal and external challenges.
The company had a difficult start to the year and reported fourth-quarter turnover and profit that fell well short of its own expectations. Management attributed the profit loss to a larger-than-normal annual reorganization in December and the transition to the new AI-powered Kokai platform.
However, turnover growth was also relatively disappointing in the first three quarters of 2025. Revenue is still growing rapidly, up 20% in the first nine months of 2025, but not as quickly as investors have come to expect. Turnover increased by 27% in the same period a year ago. The third quarter results were particularly worrying, with sales increasing by only 18%.
Many see it Amazon‘S (NASDAQ: AMZN) The demand side of the connected TV advertising platform space is increasingly being entered as a major threat to The Trade Desk’s continued growth. The tech giant is reportedly undermining The Trade Desk’s pricing and inking deals with major streaming platforms, including Netflix And Disney.
CEO Jeff Greene has dismissed these concerns, noting that Amazon and other major ad tech companies are focused on their walled gardens of owned and operated ad inventory. The Trade Desk, on the other hand, focuses on connecting advertisers with inventory on the “open internet,” as Greene puts it. That’s why The Trade Desk’s unbiased data-driven performance is a key differentiator against the competition. Additionally, the AI algorithms are based on a wide variety of advertisers and inventory history, which can lead to better ad performance for future campaigns. Still, based on the deals Amazon has made to place ads on the top streaming video platforms, combined with The Trade Desk’s decline in revenue growth, it appears that Amazon is gaining market share.
That said, the stock is now down 73% from the high reached in late 2024. That puts its forward price-to-earnings ratio below 21 and the ratio of enterprise value to revenue expectations below 6. It’s important to note that even if it gives up some of its market share to the ‘open internet’, the market is still growing rapidly. The company should be able to deliver revenue growth in the mid-teens for an extended period of time, and should show improvements in operating margin as it scales. As a result, the shares appear to be a buy heading into 2026.
DataDog reported stellar third-quarter results in early November, sending its shares soaring. But investors immediately saw the shares collapse, falling in November and December. The stock is now trading 30% lower than just after the earnings release last month. Perhaps one of the biggest culprits was insider selling, as directors and executives sold a large amount of stock at the high price. This was further exacerbated by the announced acquisition of Chronosphere by Palo Alto Networksincreasing competitive pressure on the company.
But these factors can only put temporary pressure on the share price, giving retail investors a great opportunity to buy shares today. After all, third-quarter earnings paint a rosy picture for the company in 2026. Not only did revenue rise 28%, but remaining performance obligations also rose 53%, indicating a long runway for growth.
DataDog is showing particular momentum with its AI efforts. It says more than 500 native AI customers use its tools to observe the operational performance of their large language models and generative AI apps. It recently signed a nine-figure deal with a leading AI company, management said during its third-quarter earnings call. Additionally, the BitsAI agents can investigate and mitigate issues, and suggest code changes so that software engineers can resolve them. Management reports that it has seen very strong interest in BitsAI so far.
Importantly, the growing number of companies using cloud computing to host their software and using additional cloud-based software are generating a significant amount of data. As a result, the total addressable market for DataDog and other observability platforms is growing rapidly. While DataDog stock remains expensive, with a forward price-to-earnings ratio of 69 and a price-to-sales ratio of 14, the future growth opportunities should make it worth the price. The pullback of the past two months could be a great opportunity for investors.
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Adam Levy has positions at Amazon, Netflix and Walt Disney. The Motley Fool holds positions in and recommends Amazon, Datadog, Netflix, The Trade Desk, and Walt Disney. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
Two extraordinary artificial intelligence (AI) stocks fall 30% and 73% before selling off in 2026, originally published by The Motley Fool
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