Datadog Stock Soars on AI-Driven Growth Potential and Analyst Upgrades

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.

Why Datadog Stock Cruised to a More Than 4% Gain Today | The Motley Fool

A bullish new analyst note was the news item rallying Datadog (DDOG 4.18%) stock on hump day. The stock ended the trading session more than 4% higher in price as a result, which looked especially good when placed against the S&P 500 index's marginal decline. Wednesday morning, Bank of America Securities pundit Koji Ikeda flagged Datadog as being the bank's top pick in the observability software segment. To emphasize this he raised his price target on the stock to $150 per share from his previous $138. He also reiterated his existing buy recommendation. According to reports, Ikeda expressed confidence that Datadog can deliver 20%-plus revenue growth and free-cash-flow (FCF) margins over a long-term tenure. Customers are eager to use the company's solutions, the analyst surmised from a proprietary survey given to clients, and that sentiment should underpin the continuing improvements. Ikeda also waxed bullish about Datadog's embrace of artificial intelligence (AI) functionalities to bolster its offerings. He pointed out that the company's take from "AI natives," the AI solutions Datadog has developed, is already significant, comprising nearly 9% of annual recurring revenue (ARR). I'd generally agree with Ikeda's take. Datadog seems to have its finger on the pulse of what its customers want and demand, and has been quite assertive with innovating its products (hence the hearty push into AI). I think the analyst's prediction of continued double-digit gains is realistic, and I'd consider this stock a good one to own.

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.

Datadog is a top 2nd-half pick at BofA By Investing.com

Investing.com -- Bank of America named Datadog (NASDAQ:DDOG) a top pick for the second half of 2025, citing strong execution, healthy demand trends, and its growing role in AI infrastructure. In a note to clients Wednesday, the bank reiterated its Buy rating and raised its price target for the stock to $150 from $138, reflecting increased confidence in execution and a valuation of 13.6x CY26E revenue. "We believe it's positioned to drive durable 20%+ revenue growth and 20%+ FCF margins over the long-term (i.e., Rule-of-40+), which is an attractive investment trait," BofA analysts wrote. Recent positive checks from Datadog's DASH customer conference and a proprietary survey are said to suggest strong customer momentum. "75% of customers we spoke with at DASH are planning to spend more with Datadog," BofA noted. Their survey reportedly showed customers expect a +13.2% weighted average increase in Datadog spending for 2026, up from +8.3% the year before. BofA believes Datadog is also benefiting from the AI boom. "Revenue generated from AI-natives is already notable, with 8.5% of ARR coming from them (+200% y/y, we estimate)," BofA said. While that figure captures only pure-play AI firms, the analysts expect broader adoption as more traditional enterprises launch AI-enabled experiences. BofA further highlighted Datadog's rapid pace of innovation. At DASH, the company unveiled multiple new products, which BofA says have the potential to become $100 million+ ARR contributors. These included tools centered on AI agents, automation, and deep observability into the AI tech stack. "We believe the strong execution trend will continue driving potential upside to our/Street forecasts," BofA concluded, reinforcing Datadog's standing as one of its highest-conviction ideas for 2H25.