Will Dynatrace (DT) Benefit from the Shift to Cloud Computing and Growth in AI?

Renaissance Investment Management, an investment management company, released its Q2 2025 “Large Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. The stock market experienced significant volatility in the second quarter, and yet, the S&P 500 posted an all-time high by the end of June. The liberation day tariff announcement set off havoc in the market, causing stock prices to drop 7% from April 2 to April 7. However, the market rebounded and gained more than 22% from the April 7 low through the end of June. The Russell 1000 Growth returned 17.8% and the S&P 500 returned 10.9% in the quarter. Large caps significantly outperformed their small-cap counterparts, and growth outperformed value. Against this backdrop, the strategy outperformed the S&P 500 Index but underperformed the Russell 1000 Growth benchmark. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Renaissance Large Cap Growth Strategy highlighted stocks such as Dynatrace, Inc. (NYSE:DT). Dynatrace, Inc. (NYSE:DT) offers a security platform for multi-cloud environments. The one-month return of Dynatrace, Inc. (NYSE:DT) was 5.98%, and its shares lost 0.04% of their value over the last 52 weeks. On September 09, 2025, Dynatrace, Inc. (NYSE:DT) stock closed at $50.65 per share, with a market capitalization of $15.271 billion.

Renaissance Large Cap Growth Strategy stated the following regarding Dynatrace, Inc. (NYSE:DT) in its second quarter 2025 investor letter:

"During the second quarter, we made several changes to the portfolio where we saw better opportunities for future growth. At the end of June, we added a new position in the Information Technology sector with Dynatrace, Inc. (NYSE:DT), a leading computer network infrastructure observability company focused on application performance and monitoring. We believe Dynatrace will benefit from the shift to cloud computing and growth in artificial intelligence. These technologies add vast quantities of data and increased complexity, driving a growing need for network observability solutions. Furthermore, Dynatrace has been utilizing AI in observability for over a decade, which we believe puts it in a good position to benefit from the growth of agentic AI, which will require functionality that can head off potential problems with actionable and automatic resolution while eliminating uncertainty from AI-powered systems that use correlations."

Dynatrace, Inc. (NYSE:DT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Dynatrace, Inc. (NYSE:DT) at the end of the second quarter, which was 42 in the previous quarter. Dynatrace, Inc.'s (NYSE:DT) total revenue for fiscal Q1 2026 was $477 million, representing a growth of 19% and surpassing the high end of guidance by approximately 200 basis points. While we acknowledge the potential of Dynatrace, Inc. (NYSE:DT) 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.

In another article, we covered Dynatrace, Inc. (NYSE:DT) and shared the list of best tech stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.