Cloud Computing and AI: Two Stocks Poised to Skyrocket Over the Next Decade

In a world where businesses are racing to digitize and automate, the cloud and AI sectors are the engines of innovation. Today, I'm highlighting two stocks—Microsoft (MSFT) and Datadog (DDOG)—that are not only dominating their respective niches but also primed to capitalize on a $2.5 trillion cloud market and the AI revolution. Let's dive into why these companies could turn a $1,000 investment into a fortune over the next decade.

Microsoft: The Cloud Titan with an AI Edge

[text2img]A split image of Microsoft's logo and a dynamic 3D cloud network, with AI-driven data streams flowing through it[/text2img]

Microsoft isn't just a software giant—it's the gatekeeper of the cloud. In its latest quarter, revenue soared to $70.1 billion, a 13% year-over-year jump, driven by Azure's 33% revenue growth and AI initiatives like Copilot and Microsoft Fabric. Azure's cloud infrastructure now powers everything from Fortune 500 supply chains to AI-driven chatbots, and its $42.4 billion Microsoft Cloud revenue (up 20%) is a testament to its dominance.

But what's truly exciting is AI. Microsoft's AI revenue run rate is now $13 billion annually, a 175% surge from 2024. Copilot, its AI productivity tool, is used by 90% of the Fortune 500, and Azure's AI efficiency improvements (30% better power usage) are luring cost-conscious enterprises. This isn't just about today's earnings—it's about owning the future of how businesses compute.

Why Now?
- Market Share: Azure is the #2 cloud leader globally, trailing only AWS but growing faster.
- Ecosystem Power: Microsoft's integration of AI into Office 365, Dynamics 365, and LinkedIn creates a moat no startup can breach.
- Valuation: At 30x forward earnings, it's cheaper than most tech darlings, yet still a growth machine.

Datadog: The AI-Powered Cloud Monitor for the Modern Enterprise

Datadog is the unsung hero of the cloud transition. Its software lets companies monitor, secure, and optimize their sprawling cloud infrastructure—think of it as the “check engine light” for the digital economy. In Q1 2025, revenue hit $762 million, a 25% jump, with customers like $100k+ ARR growing 13% year-over-year.

But Datadog isn't just tracking servers—it's redefining observability with AI. Its open-weights AI model for cloud monitoring spots anomalies in real time, while the Boom benchmark (the industry's largest observability dataset) lets customers test tools against its own. Even better: Datadog's FedRAMP High “In Process” status opens a goldmine of federal contracts, where security is non-negotiable.

Why Now?
- Niche Leader: In cloud observability, Datadog holds 69% market share—way ahead of rivals like ServiceNow (18%).
- AI Innovation: Its open-source AI moves are building a community of developers who'll embed Datadog into their workflows.
- Valuation: At 262x trailing P/E, it's pricey—but with a 25% revenue CAGR expected through 2029, this could be worth the wait.

Why These Two—and Not the Next “Hot” Startup?

The cloud and AI markets aren't for the faint of heart. Startups may offer flash, but scale matters. Microsoft's $255 billion in cash lets it buy talent (hello, OpenAI partnership) and out-innovate rivals. Datadog, meanwhile, is profitable with $836 million in free cash flow—a rarity in high-growth tech.

Plus, long-term trends are on their side:
1. Cloud Spending: BofA forecasts $1.4 trillion in enterprise software spending by 2026, with AI and observability tools at the top of wish lists.
2. AI Everywhere: By 2030, AI could add $15 trillion to the global economy—and Microsoft and Datadog are the infrastructure and tools to make it happen.
3. Regulatory Winds: Governments are mandating better cloud security (see Datadog's FedRAMP push), creating recurring revenue streams.

The Buy: Split $1,000 for Maximum Upside

If I were investing $1,000 today, I'd put $600 in Microsoft and $400 in Datadog. Here's why:
- Microsoft is a “buy and hold” stock. Its dividend (currently 1.2% yield) adds stability, while Azure's growth ensures steady returns. A $1000 stake could balloon to $20,000+ in 10 years if it mirrors its 10-year average growth.
- Datadog is a high-risk, high-reward bet. If it wins the observability arms race, its valuation could soar—but investors must stomach volatility. Even a 50% dip? I'd buy more.

Final Word: These Stocks Are the Future—Don't Miss the Bus

The cloud and AI revolution isn't slowing down. Microsoft is the elephant in the room that keeps growing, while Datadog is the specialist solving today's most critical tech problems. Together, they offer a balanced portfolio: one for stability, the other for explosive growth.

Action Alert: If you're in for the long haul, allocate here. Over a decade, these two could turn your $1,000 into a life-changing sum.

— The Mad Money Strategy