Investing.com -- Morgan Stanley says accelerating public-cloud growth is setting up a stronger 2026 ahead for three key names, arguing that the recent pullback contrasts with firming demand signals.

Snowflake, MongoDB and Datadog are the companies in question. Analyst Sanjit Singh said hyperscaler expansion “accelerated for the third quarter in a row to +33%,” supported by AI workloads, cloud migrations and broader digital-transformation projects.

Morgan Stanley noted that Google Cloud delivered the sharpest improvement, growing “48% YoY in Q4, relative to 33.5% YoY in Q3,” while AWS revenue rose “24% YoY cc,” more than four points above its third-quarter pace.

The bank stated that the acceleration comes as Snowflake shares are down about 20% over the past month, with Datadog down 9% and MongoDB down 12%.

“When hyperscalers are accelerating … the database and observability markets are poised to benefit,” Morgan Stanley remarked, adding that underlying demand for Snowflake, MongoDB and Datadog is improving. The firm reiterated its overweight ratings on all three for 2026.

For Datadog, Morgan Stanley expects a strong quarter, citing “stable-to-improving observability environment” and continued margin expansion, though it said initial guidance may remain cautious.

Snowflake was described as “among the fastest growing vendors” in partner checks, supported by migrations, increased analytics use and traction in Snowpark and Cortex tools.

MongoDB, meanwhile, is expected to post about “6% of top-line upside” in its quarter and guide revenue broadly in line with consensus.

Morgan Stanley believes 2026 will be “a strong year for growth” across all three names.