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Investing.com - Bernstein raised its price target on Datadog (NASDAQ:DDOG) to $170.00 from $147.00 on Wednesday, while maintaining an Outperform rating on the cloud monitoring company’s stock. The new target represents potential upside from the current price of $154.52, though InvestingPro analysis suggests the stock is trading above its Fair Value. With a market capitalization of $53.89 billion, Datadog maintains impressive gross profit margins of nearly 80%.
The investment firm cited "strong H2 cloud consumption trends" as a key factor in its decision, noting that Datadog and other cloud-linked consumption software companies have rallied following a mid-summer pullback. This momentum is reflected in the stock’s robust 77.6% gain over the past six months, with 32 analysts recently revising their earnings expectations upward according to InvestingPro data.
Bernstein’s analysis suggests the second half of the year might see "nice acceleration in base revenue ex-AI," while market sentiment indicates that "the worst case OpenAI churn scenario seems unlikely in the near term."
Based on web metric analysis, the firm has increased its growth projections for Datadog’s non-AI business components for the second half of 2025 and fiscal years 2026-2027, while making only slight adjustments to AI-related growth estimates.
The new price target was calculated using a combination of rule of 40-based multiples regression (approximately 15x Price to NTM revenue, up from about 14x) and discounted cash flow analysis with an 11% weighted average cost of capital and 3% terminal growth rate.
In other recent news, Datadog has reached a significant milestone by achieving 1,000 integrations on its monitoring platform, enhancing its coverage across various technologies, including AI infrastructure. This development comes as the company continues to expand its offerings, integrating with providers like NVIDIA and OpenAI. Additionally, Datadog has renewed its contract with OpenAI, although the details of the contract’s size and scope remain unclear.
In terms of analyst activity, Wells Fargo initiated coverage on Datadog with an Overweight rating and a $190 price target, citing the growth potential from its AI-native customer base. DA Davidson also raised its price target to $180, maintaining a Buy rating due to positive usage growth. Meanwhile, BMO Capital increased its price target to $154, noting potential revenue upside in the coming quarter. Stifel reiterated a Hold rating with a $135 price target, acknowledging the contract renewal with OpenAI. These developments highlight a mix of strategic growth and analyst confidence in Datadog’s future prospects.
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