AI Boom’s “Edge” Hides Massive Opportunities! Analysts Bullish on These Three Under-the-Radar Tech Stocks
While the AI trade has been the rocket fuel for the U.S. bull market over the past few years, warnings about an “AI bubble” have grown louder lately.
Even though the latest earnings from top tech giants were stellar, AI-related trading has become increasingly volatile in recent weeks, prompting investors to hunt for opportunities outside the core names.
Gil Luria, Head of Technology Research at investment bank DA Davidson, said in a fresh interview that he remains broadly bullish on artificial intelligence but sees particularly strong potential in a handful of stocks outside the main AI theme.
Luria specifically highlighted three smaller-cap tech names that he believes have been drowned out by the “noise” from the mega-cap tech giants. All three operate in AI infrastructure and software and are riding the wave of boundless investor enthusiasm for AI’s transformative potential.
He explained:
“We’ve been focusing on infrastructure software stocks this year because they are the clearest beneficiaries of rising AI usage — without many of the risks that application-software companies face.”
The three companies Luria calls out beyond the core AI trade are:
- Snowflake (SNOW) – up 62% YTD
U.S. cloud data warehousing company headquartered in Bozeman, Montana. Its platform enables near-zero-latency data analytics and synchronized access to datasets. Services run on AWS, Microsoft Azure, and Google Cloud.
- Datadog (DDOG) – up 11% YTD
U.S. SaaS company providing monitoring and analytics for servers, databases, tools, and services.
- JFrog (FROG) – up 113% YTD
The only end-to-end software supply-chain platform that delivers full visibility, security, and control with automated delivery of trusted releases. Its highly scalable hybrid platform is open, flexible, and integrates with every package technology and tool in the software supply chain.
Enterprises gain complete traceability for any release and deployment environment — including ML models, edge software, and software deployed in production data centers.
Luria points out that little-known Silicon Valley software company JFrog has clearly stood out, outperforming every single one of the “Magnificent Seven” year-to-date.
He is optimistic that software infrastructure will benefit no matter how the broader AI market evolves:
“No matter how enterprise customers build their AI tools — or which AI tools they build — they will need more data-lake capacity (Snowflake), more observability for apps and infrastructure (Datadog), and more binary management (JFrog).”
Luria emphasizes that the AI trade is not going away and will continue driving growth across industries. However, the clear advantage for Snowflake, Datadog, and JFrog is that big companies will always need their services to keep scaling their AI tools.
“These three companies are already excellent, but the more AI is used, the better they get,” he added.