George Budwell, The Motley Fool

Thu, Jun 19, 2025, 2:45 AM5 min read

• Both companies are attacking massive addressable markets with differentiated products, but one has a clearer path to sustained hypergrowth.

• Wall Street's obsession with artificial intelligence (AI) monitoring may be overshadowing a bigger opportunity in the physical infrastructure of the space economy.

• The cheaper valuation story here isn't the bargain it appears to be when you factor in competitive dynamics.

• 10 stocks we like better than Rocket Lab ›

Wall Street loves a good David versus Goliath story. But what happens when two Davids are battling entirely different giants?

That's the compelling dynamic between Rocket Lab USA (NASDAQ: RKLB) and Datadog (NASDAQ: DDOG) -- two disruptive innovators, each aiming for a trillion-dollar opportunity from opposite ends of the tech frontier. Datadog is entrenched in the red-hot world of artificial intelligence (AI) infrastructure and observability. Rocket Lab is scaling up in the fast-emerging space economy, building the tools -- and rockets -- for a multiplanet future.

AI may be grabbing headlines, but investors might be missing a more explosive opportunity just over the horizon. Which of these high-growth stocks is the better buy?

Rocket Lab reported $123 million in first-quarter 2025 revenue, reflecting 32% year-over-year growth. The company has rapidly evolved from a launch provider into a vertically integrated space systems manufacturer. Its product portfolio now includes satellite buses, solar power systems, separation stages, and flight software.

In 2023, Rocket Lab components were present on approximately 38% of all orbital missions, a testament to its growing influence in the commercial space supply chain. The upcoming Neutron rocket, designed for medium-lift launches and human-rated capability, could further position Rocket Lab as a key player in the next phase of orbital access.

Datadog posted $762 million in first-quarter revenue, representing 25% year-over-year growth and beating analyst expectations. The observability platform now serves 3,770 customers generating more than $100,000 in annual recurring revenue.

More importantly, the company's strategic push into AI observability is gaining traction. AI-native companies now account for 8.5% of total annual recurring revenue, up from just 3.5% a year ago. This surge highlights Datadog's growing relevance as AI workloads become central to enterprise infrastructure.

This is where conventional wisdom starts to break down. Datadog operates in the observability market, which is projected to grow at a steady 12.2% annually through 2030. That's impressive, but Rocket Lab is targeting a much more explosive opportunity -- the deployment of over 10,000 satellites requiring launch services by decade's end. This will support a total addressable market expected to exceed $10 billion.