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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.