ClearBridge Investments, an investment management company, released its “ClearBridge Large Cap Growth Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities continued their upward journey in the third quarter with the S&P 500 Index surging 8.1% and tech-heavy Nasdaq Composite rising 11.2% to record highs. Investor optimism was driven by favorable tariff results, the One Big Beautiful Bill in July, expected interest rate cuts, and strong corporate earnings, particularly in technology and the Magnificent Seven. The benchmark Russell 1000 Growth Index rose 10.5% for the quarter. The strategy delivered solid absolute performance in the quarter but underperformed the benchmark. Underexposure to perceived AI winners and holding several names deemed by investors to be AI losers led to the underperformance. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, ClearBridge Large Cap Growth Strategy highlighted stocks such as Datadog, Inc. (NASDAQ:DDOG). Datadog, Inc. (NASDAQ:DDOG) is an observability and security platform for cloud applications. The one-month return of Datadog, Inc. (NASDAQ:DDOG) was 5.76%, and its shares gained 22.53% of their value over the last 52 weeks. On October 3, 2025, Datadog, Inc. (NASDAQ:DDOG) stock closed at $151.82 per share, with a market capitalization of $52.946 billion.
ClearBridge Large Cap Growth Strategy stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its third quarter 2025 investor letter:
“During the quarter, the Strategy initiated new positions in infrastructure software providers Oracle and Datadog, Inc. (NASDAQ:DDOG) and added to custom silicon developer Broadcom. Datadog operates a monitoring, observability and data security platform for cloud applications. Observability is a large and growing end market with penetration rising as use and complexity of applications grow, requiring more performance monitoring. Datadog is a leader in cloud application monitoring, offering ease of use, breadth and scalability superior to its competitors. We believe large language model (LLM) observability, a rapidly growing market due to the acceleration of Gen AI workloads, creates a new vector for growth not reflected in fundamental estimates. Datadog’s mission critical offering and rapid innovation should support attractive >20% revenue growth with an attractive valuation as the company further scales margin and cash flow.”
Datadog, Inc. (NASDAQ:DDOG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 103 hedge fund portfolios held Datadog, Inc. (NASDAQ:DDOG) at the end of the second quarter, compared to 84 in the previous quarter. Datadog, Inc. (NASDAQ:DDOG) reported revenue of $827 million in the second quarter of 2025, marking an increase of 28% year-over-year. While we acknowledge the potential of DATADOG, INC. (NASDAQ:DDOG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
