Tech Sell-off: 2 Growth Stocks Investors Might Regret Not…

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1. Datadog: Providing critical tools for AI deployment

Tens of thousands of businesses use Datadog‘s (DDOG -7.19%) cloud observability platform to monitor their digital infrastructure, because it can immediately alert them to technical glitches that might be affecting their sales channels or mission-critical software applications. I’ve advised caution on this stock during the past few months solely because of its high valuation (which I’ll discuss further in a moment), but a correction could be a great long-term buying opportunity.

DDOG – Datadog

$247.11-$19.14 (-7.19%)

NASDAQ · As of 4:00 PM ET 10/16/26

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Moneyball Superscore89/100

Key data points

Market capMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.$88.73B

Day’s range$243.63 – $269.10

52wk range$98.01 – $300.68

Volume3.8M

Avg volume4M

Gross margin79.48%

During the past couple of years, Datadog has released a suite of observability tools specifically for the AI industry. LLM Observability, for example, helps developers identify technical issues, track costs, and analyze the quality of outputs when building large language models (LLMs). These models sit at the foundation of customer-facing chatbots and agents, so errors or inaccuracies could hurt a business both financially and reputationally.

In April, Datadog launched another product called GPU Monitoring to help businesses track usage costs and uncover technical issues when deploying graphics processing units (GPUs). These are the primary data center chips used when developing and running AI software, so they must be performing at optimal capacity to maximize processing speeds and minimize costs.

Datadog said all 10 of the AI industry’s leading companies were customers as of June 30, and although it hasn’t named them, we can reasonably assume the s of Anthropic and OpenAI are among them. Datadog also said Model Context Protocol (MCP) server calls quadrupled during the second quarter of 2026, compared to the first quarter just three months earlier. In simpler terms, that means the amount of AI-related activity occurring in Datadog’s ecosystem is surging.

Datadog’s revenue growth accelerated to 36% in the second quarter. As a result, management raised its 2026 revenue forecast by $140 million to $4.46 billion (at the midpoint of the projected range). But valuation remains a concern; its stock trades at a price-to-sales (P/S) ratio of 24.3, a steep premium to its three-year average of 17.7.

DDOG PS Ratio data by YCharts

As a result, it probably isn’t a good idea to buy Datadog stock today. However, a decline of 20% or 30% amid a broader market sell-off could be a golden opportunity for investors to take a long-term position.

2. Palo Alto Networks: Securing the AI revolution

Every time an enterprise plugs their internal data into a third-party AI model to run a chatbot or agent, they are creating a new attack surface for hackers to exploit. To make matters worse, malicious actors are now using AI to constantly probe corporate networks for vulnerabilities, making successful breaches more ly than ever. Palo Alto Networks (PANW -7.63%) is the world’s largest pure-play cybersecurity company by market capitalization, and its products help mitigate these new threats.

PANW – Palo Alto Networks

$342.00-$28.27 (-7.63%)

NASDAQ · As of 4:00 PM ET 10/16/26

Premium Feature

Moneyball Superscore88/100

Key data points

Market capMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.$279.76B

Day’s range$339.55 – $375.71

52wk range$139.57 – $432.33

Volume8.8M

Avg volume6.1M

Gross margin65.48%

Palo Alto’s Prisma AIRS platform, for instance, monitors every internal AI agent’s interactions in real time, while constantly scanning third-party models for vulnerabilities. It’s effectively a gateway for all AI-related traffic, making sure malicious applications can’t infiltrate the enterprise.

To handle external threats, Palo Alto’s Cortex XSIAM platform uses AI to completely automate the security operations center. It handles threat detection and incident response, reducing the average customer’s median time to respond to an incident to just 10 minutes, whereas it might have been days or even weeks previously.

Products Prisma AIRS and Cortex XSIAM fall under Palo Alto’s next-generation security (NGS) portfolio, which had $9 billion in annual recurring revenue (ARR) at the conclusion of the company’s 2026 fiscal year (ended July 31). That was up by a whopping 63% from the year-ago period, so these AI-related products are experiencing significant demand. In fact, Palo Alto believes it can more than double its NGS ARR to $20 billion by fiscal 2030.

However, while that growth sounds promising, it’s important for investors to pay the right price for Palo Alto stock. It’s currently trading at a P/S ratio of 22.6, a significant premium to its three-year average of 15.6, so waiting for a correction might be the right move.