Comparing Growth Stocks: Which Performs Better - Rocket Lab USA or Datadog?
In the dynamic world of technology and space, two companies – Rocket Lab USA (RKLB) and Datadog (DDOG) – are making waves. While Rocket Lab is making strides in the space economy, Datadog is carving out a niche in the AI infrastructure and cloud monitoring sector.
Rocket Lab, with its focus on launch services and the development of the Neutron rocket, has seen its stock soar about 700% in the past year due to successful launches and contracts. However, the company's current valuation seems stretched, with a price-to-sales ratio (~35.5) that is significantly higher than the S&P 500 (3.1), and negative profitability metrics, indicating ongoing operational losses and financial instability.
On the other hand, Datadog benefits from secular growth trends in AI adoption, cloud computing, and enterprise digital transformation. Although no direct data on Datadog’s exact valuation is available, the AI infrastructure market is widely regarded as a rapidly expanding and scalable domain, often with stronger recurring revenue streams and profitability potential compared to the capital-intensive space launch industry.
Here's a side-by-side comparison of these two companies:
| Aspect | Rocket Lab (RKLB) | Datadog (DDOG) | |----------------------------|----------------------------------------------|------------------------------------------------| | Market | Space economy (rocket launches, satellite) | AI infrastructure and cloud monitoring | | Growth Driver | New rocket tech, launch contracts | AI adoption, cloud migration, SaaS scalability | | Valuation | Price-to-sales ~35.5 (very high), overvalued | Typically high but justified by SaaS growth | | Profitability | Negative EPS, net margin, and ROE | Generally improving profitability (typical) | | Risk Level | High volatility, capital-intensive industry | Lower volatility, high recurring revenues |
Datadog's strategic push into AI observability is gaining traction, with AI-native companies now accounting for 8.5% of total annual recurring revenue. The company posted $762 million in first-quarter revenue, a 25% year-over-year growth, and serves 3,770 customers generating more than $100,000 in annual recurring revenue.
In contrast, Rocket Lab reported $123 million in first-quarter 2025 revenue, a 32% year-over-year growth. The observability market, where Datadog operates, is projected to grow at a steady 12.2% annually through 2030.
Rocket Lab's Neutron rocket, if delivered on schedule and with promised performance, could inject price pressure into the market and capture a significant share of future demand. The rocket, with a target launch price between $50 million and $55 million, undercuts SpaceX's Falcon 9 and is purpose-built for medium-lift missions.
Datadog has also been making strategic moves, such as acquiring AI-focused startup Metaplane to meet rising demand for data quality monitoring as enterprises expand their use of AI. The company faces competition from hyperscalers like Amazon, Microsoft, and Alphabet, each bundling observability tools into their platforms.
In conclusion, while Rocket Lab offers an exciting opportunity in the space economy, Datadog, with its strong secular tailwinds in AI infrastructure, scalable business models, and generally improving profitability, is generally considered to have better long-term growth potential. However, investors should consider their own risk tolerance and market outlooks before deciding.
[1] Rocket Lab Financial Metrics [2] Datadog Financial Metrics [3] S&P 500 Financial Metrics
- Despite Rocket Lab's success in the space economy, its high price-to-sales ratio and negative profitability metrics indicate financial instability, emphasizing the need for investors to think twice about investing in the company.
- On the flip side, Datadog's strategic push into AI observability and scalable business model, along with typically high valuation justified by SaaS growth, could make it a worthy investment option for those looking for long-term growth potential in technology and AI infrastructure.
- The hypothetical launch of Rocket Lab's Neutron rocket, priced competitively compared to SpaceX's Falcon 9, could pose a financial challenge for other space technology companies, offering a unique investment opportunity in the space economy. On the other hand, Datadog's acquisition of AI-focused startup Metaplane can be seen as a strategic move to capitalize on the rising demand for data quality monitoring in the AI infrastructure domain, making it appealing for investors following AI technology trends.
