Datadog's AI-Driven Growth Potential Sparks Wolfe Research Upgrade

Wolfe Research upgrades this cloud computing stock on AI growth opportunities

DataDog could be the latest beneficiary of the growth opportunity in artificial intelligence, according to Wolfe Research. The investment firm upgraded the cloud computing stock to an outperform rating from peer perform. Analyst Alex Zukin also set a price target of $150. Shares of DataDog have slumped 17% this year and 24% in the last three months alone, but Zukin's forecast implies a roughly 26% upside ahead. DDOG YTD mountain DDOG YTD chart Zukin wrote that he first downgraded DataDog in February after the company shared underwhelming growth expectations for its fiscal year 2025. However, he grew more optimistic after attending Datadog's 2025 DASH conference in New York City, where he surveyed more than 150 of the company's customers. "Well, after attending DASH in NYC where the vibes were sky-high with AI announcements aplenty, we are here to say that we believe those turbulent times are in the rearview and this dog isn't just hunting again, it's feasting!" he wrote. "We walked away from our time at DASH more confident in the near-term growth opportunity around AI and remain confident in DDOG's market leading products driving long-term success." Specifically, fears around the concentrated AI cohort "dissipated" after a key renewal, with at least 17 of the top 50 AI companies now DataDog customers. The analyst added that customers seem to have growing traction around DataDog's security offerings. "We now view DDOG as one of the best positioned names in our coverage to benefit from AI adoption from both an adjacent (more workloads to be observed) and direct (new AI offerings) point of view and with shares trading at 10x CY26 sales, we are upgrading to an Outperform rating with a $150 PT," Zukin added.

Wolfe upgrades Datadog as it sees co better positioned to benefit from AI demand By Investing.com

Investing.com -- Wolfe Research upgraded Datadog (NASDAQ:DDOG) to Outperform and raised its price target to $150, saying the software company appears better positioned to benefit from rising demand for AI-related tools than previously thought. The upgrade follows Datadog's DASH user conference in New York, where Wolfe analysts said customer feedback and new product announcements pointed to improving sentiment. Wolfe had downgraded the stock in February, citing weak 2025 growth guidance and concerns about Datadog's reliance on a small group of AI-native customers. "Fears around the concentrated AI cohort dissipated" following a key customer renewal, the analysts wrote, adding that 17 of the top 50 AI companies are now clients. A survey of 150 Datadog customers indicated that while some optimization pressures persist, they are roughly in line with last year and are being balanced by increased usage and platform consolidation. Wolfe also cited new partnerships and product updates, including AI-focused tools such as Cursor and Codex, as signs the company is expanding its offerings beyond core monitoring and observability software. The firm now sees annual revenue growth in the mid-20% range in the near term, with growth above 20% continuing through 2027. That forecast includes an estimated 88% compound annual growth rate for Datadog's AI-related business. Wolfe said Datadog shares, which trade at around 10 times estimated 2026 sales, now look more attractive based on its revised growth outlook.