AI Sales May Soar 600% by 2028: 2 Brilliant AI Stocks to Buy Now, According to Wall Street

Capital spending related to artificial intelligence (AI) added more than a percentage point to U.S. economic growth during the first half of 2025, surpassing consumer spending as the primary source of expansion. But Evercore analyst Julian Emanuel says the bull market is far from over, calling AI the most transformative technology since the internet.

Indeed, Morgan Stanley analysts estimate AI sales across cloud and software companies will grow more than 600% to surpass $1 trillion annually by 2028. Investors can lean into that trend by purchasing shares of Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) and Datadog (NASDAQ: DDOG).

Analysts are generally bullish on both stocks:

• Among 73 analysts, Alphabet has a median target price of $330 per share. That implies 19% upside from its current share price of $278.

• Among 46 analysts, Datadog has a median target price of $170 per share. That implies 10% upside from its current share price of $155.

Read on to learn about these AI stocks.

Image source: Getty Images.

1. Alphabet

Alphabet is the largest adtech company in the world due to its ability to engage internet users and source consumer data through platforms like Google Search and YouTube. The search market is undoubtedly shifting toward artificial intelligence (AI) tools like Perplexity and ChatGPT, but Alphabet is leaning into the trend with its own generative AI overviews.

Alphabet's Google also runs the third-largest public cloud in terms of cloud infrastructure and platform services (CIPS). The company accounted for 13% of CIPS revenue in the third quarter, up a percentage point from where it started the year. As a recognized leader in AI infrastructure and large language models, Google is well positioned to continue gaining share as AI demand increases.

Alphabet recently reported solid third-quarter financial results that beat estimates on the top and bottom lines. Revenue increased 16% to $102 billion, an acceleration from 15% growth in the same period last year, and generally accepted accounting principles (GAAP) earnings increased 35% to $2.87 per diluted share. CFO Anat Ashkenazi highlighted strong demand for AI infrastructure, specifically calling attention to interest in custom chips and Gemini models.

Wall Street estimates Alphabet's earnings will increase at 15% annually over the next three years. That makes the current valuation of 27 times earnings look reasonable. Investors should feel comfortable buying a small position in this AI stock today.

2. Datadog

Datadog develops observability software. Its platform includes about two dozen products that help businesses monitor the performance of critical IT infrastructure and applications. It also features an artificial intelligence engine called Watchdog that automates anomaly detection, incident alerts, and root cause analysis to help operations teams resolve problems more quickly.

The artificial intelligence revolution should be a tailwind for Datadog. Forrester Research recently recognized the company as a leader in AI for IT operations, a technology that leans on automation to help IT teams keep enterprise software and services functional. Gartner has also recognized the company as a leader in observability platforms, citing its ability to support generative AI workloads.

Datadog reported encouraging second-quarter financial results that beat estimates on the top and bottom lines. Revenue rose 28% to $827 million, and non-GAAP earnings increased 7% to $0.46 per diluted share. CEO Olivier Pomel highlighted momentum with new AI agents that automate incident response, coding, and security event triage.

Wall Street estimates Datadog's adjusted earnings will grow at 19% annually through 2028. That makes the current valuation of 84 times earnings look expensive. But I think analysts have missed the mark.

Datadog beat the consensus earnings estimate by an average of 15% over the last six quarters. That pattern is likely to continue as the company focuses on cost savings and gradually pulls back on R&D spending.

Investors with a time horizon of at least three years to five years should feel comfortable buying a small position today. If the stock price drops 15%-plus at some point in the future, consider building a slightly larger position.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Datadog, and Evercore. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.