The 22-year-old, who scorched over for three tries as Wales raced to the Six Nations Grand Slam, had been targeted by big-spending clubs in France.
But the starlet turned down the lure of the Top 14 to pen a new one-year contract with the Blues.
“He’s made a very educated, very mature decision for a guy who has had a lot thrown at him in a short space of time,” Davies told BBC Sport.
“He’s a young player who’s come through the system here and it’s important that we’ve kept a player of his quality.
“Obviously he’s a good try-scorer, he’s had a fantastic first season playing for Wales and the Blues and there’s more to come, that’s for sure.
“We’re excited about trying to expose him to more development for the benefit of the Blues, obviously, and Welsh rugby as a whole.”
Cuthbert bucked a trend of players leaving Wales for lucrative deals abroad but Davies insists staying in Wales holds distinct advantages.
“I respect these players and they’ve got a hard job to do. I love coaching in this day and age but I wouldn’t have liked to played, if I’m honest, for a variety of reasons,” added the former Wales lock.
“But he will get a lot of support here, more importantly people understand him here, they understand where he is in his career, they understand what he needs to be given and the type of support structures he needs in place.
“They’re all here for him and I’m just pleased he’s staying and hopefully he’ll develop even further.”
