Cloud stocks Splunk (NASDAQ:SPLK) and Datadog (NASDAQ:DDOG) got some attention from KeyBanc Capital Markets today but for different reasons. Michael Turits changed his rating from Hold to Buy for the former while downgrading the latter from Buy to Hold.
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When it comes to Splunk, Turits pointed to the good work done by its CEO to make the company more efficient and become cash flow positive. Conversely, the analyst believes that a slowing economy will have a greater impact on Datadog. Indeed, DDOG will have a harder time achieving higher margins thanks to increases in sales and R&D expenses.
Overall, the cloud industry – as measured by the First Trust Cloud Computing ETF (SKYY) – is down today, along with the broader market. Although the ETF has had a solid rally since the start of 2023, it is still almost 24% lower on a trailing 12-month basis.
