If anyone doubted that tech still leads the market, the past few weeks just silenced them. Against a backdrop of trade tensions, inflation pressures, and shifting rate expectations, two names – Nvidia and Datadog – are proving that innovation and investor enthusiasm can slice through macro fog like a laser beam.
Nvidia is now flirting with a $4 trillion market cap, and Datadog is riding a wave of momentum thanks to its impending S&P 500 inclusion. These aren’t just individual rallies – they’re a signal that AI euphoria and software demand remain alive and well, even when broader economic indicators flash uncertainty.
Let’s break down what’s happening, what it means for markets, and why investors keep flocking to these names.
Nvidia: The Relentless Climb Toward $4 Trillion
Nvidia is having a summer for the history books. The company briefly touched a $3.92 trillion market cap last week, putting it within striking distance of becoming the most valuable public company of all time. That’s not hyperbole – it’s trajectory.
The company has now surged nearly 15% in June alone, and some analysts are already penciling in a $4 to $5 trillion valuation by late summer. If that happens, Nvidia could single-handedly reshape how the S&P 500 is weighted. Currently, it makes up about 6.9% of the index. If it crosses the $4T mark, its share could swell closer to 8%.
That’s huge – not just in symbolic terms, but in how it affects ETFs, mutual funds, and the behavior of passive money.
So, what’s fueling the momentum?
In short: AI remains the most powerful secular theme in tech. Nvidia continues to dominate the market for AI accelerators, including chips used to train large language models and process real-time inference. Demand from hyperscalers like Microsoft, Amazon, and Google hasn’t just remained strong – it’s accelerating.
Despite periodic selloffs – especially when headlines suggest renewed U.S. chip export controls to China – investors haven’t lost their appetite. Wall Street appears willing to look through near-term geopolitical headwinds, betting that AI infrastructure is now too essential to derail.
And they’re not alone. Analysts at Wedbush recently reiterated their view that Nvidia is “the foundational backbone of the AI economy,” with CEO Jensen Huang considered the new Steve Jobs by some on Wall Street.
Datadog: From Growth Play to Institutional Star
Meanwhile, Datadog has quietly become one of the strongest tech performers of the past month. The observability software company is officially joining the S&P 500 on July 9, replacing Whirlpool – and investors are already celebrating.
Since the announcement, Datadog shares have jumped over 10%, reflecting both technical inflows from passive funds and renewed conviction in its fundamentals. It’s easy to see why: in Q1, Datadog posted 25% year-over-year revenue growth, continued strong free cash flow, and robust customer expansion.
The S&P 500 inclusion is more than symbolic. For many large funds, it’s a mandate to buy. Index-tracking institutions now must hold Datadog in proportion to its S&P 500 weighting, which can provide consistent demand and long-term price support.
But this isn’t just an index play. Analyst upgrades have followed fast. UBS, TD Cowen, and Wedbush have all raised their price targets – some to $170+, citing strong product demand and favorable enterprise IT spending trends.
Retail investors are taking note, too. On Stocktwits, Datadog’s sentiment score jumped into the “extremely bullish” range after the inclusion news, hitting 83 out of 100. That retail excitement has helped fuel volume, and now DDOG is back on watchlists across both growth and momentum circles.
How They’re Powering Through the Macro Noise
All this comes at a time when headlines could easily be sending tech into retreat. The ISM manufacturing index just posted its fourth consecutive month of contraction. Trade policy risks – especially tariff noise from both Washington and Beijing – are back in the conversation. And inflation, while cooling, is still above the Fed’s target.
Yet Nvidia and Datadog are doing the opposite of retreating. They’re leading.
Why? Because markets know that not all data points are equal. Investors are distinguishing between cyclical macro weakness and structural tech strength. While factories may be slowing, enterprise spending on cloud infrastructure and AI continues to grow. And even if the Fed holds rates a little longer, few believe they’ll rise again – meaning valuations have room to stretch.
In that environment, mega-cap tech and high-quality software companies are seen as relatively safe bets – especially those with clear pricing power and explosive demand.
The AI Euphoria Cycle Isn’t Done Yet
Every major rally has its skeptics, and AI is no exception. But Nvidia and Datadog aren’t just riding hype – they’re delivering numbers that justify the optimism.
Nvidia’s data center revenue has tripled year-over-year. Datadog is landing larger enterprise contracts and expanding its platform usage. These aren’t flukes – they’re the kinds of financials that give investors cover to stay long, even in a choppy macro backdrop.
And sentiment still matters. The narrative around AI isn’t weakening – it’s evolving. What began as speculative excitement around generative models is maturing into real-world infrastructure buildout. Nvidia is at the center of that. Datadog is helping to monitor and manage it.
Together, they represent two sides of the same transformation: the hardware that runs AI, and the software that observes and scales it.
Final Take: Big Tech Is Still in Charge
The past month has made one thing clear: leadership in this market still belongs to tech. And within tech, the clearest themes – AI and cloud-native software – are carrying the torch.
Whether Nvidia crosses $4 trillion this week or next isn’t the point. What matters is that investor conviction remains strong, earnings continue to support high valuations, and leadership isn’t slipping.
Datadog, too, shows that software names with real fundamentals can break out – even as macro concerns swirl.
The trade fog may not clear anytime soon. But Nvidia and Datadog aren’t waiting for perfect skies. They’re already soaring.
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