# AI Boom Shifts to Software: 2 Stocks Wall Street Recommends

> Wall Street analysts identify Amazon and Datadog as key beneficiaries as AI adoption expands beyond semiconductors.
- Title: AI Boom Shifts to Software: 2 Stocks Wall Street Recommends
- Summary: Wall Street analysts identify Amazon and Datadog as key beneficiaries as AI adoption expands beyond semiconductors. Morgan Stanley analysts recommend Amazon…
- Keywords: ai boom, morgan stanley, amazon, datadog, ai adoption, operating margin, ai infrastructure, finance, money, Boom, Shifts, Software
- Source: The Motley Fool — https://fool.com/investing/2026/10/19/ai-boom-new-phase-2-stocks-buy-now-wall-street
- Author: Trevor Jennewine
- Published: 2026-10-19T08:48:02+00:00
- Read time: 1 min
- Topics: ai boom, morgan stanley, amazon, datadog, ai adoption, operating margin, ai infrastructure, finance, money
## AI Boom Enters New Phase
The AI boom began with ChatGPT's launch in November 2022, driving aggressive investment cycles.
## Morgan Stanley's Inflection Point
Analysts say the AI trade will shift from infrastructure to software companies and ai adopters by 2028.
## Amazon: AI Efficiency Gains
Amazon uses ai and robotics to optimize inventory, delivery, and warehouse operations, improving margins.
## Amazon's Margin Growth
Amazon's trailing-12-month operating margin expanded over 3 percentage points to 12.1% in the last quarter.
## Amazon's 2028 Projection
Morgan Stanley expects amazon's operating margin to reach 17% by 2028 as ai adoption grows.
## Datadog: AI Monitoring Software
Datadog provides ai-powered observability tools for infrastructure and application monitoring.
## Datadog's Q2 Results
Datadog reported 36% revenue growth to $1.1 billion and 41% non-gaap earnings growth in q2.
## Datadog's Valuation Concern
Datadog's current valuation of 104 times adjusted earnings appears expensive despite strong growth.
## Key takeaway

Morgan Stanley analysts recommend Amazon and Datadog as AI adoption grows, with Amazon expected to hit 17% operating margins by 2028 and Datadog's valuation appearing expensive despite strong growth.