Bernstein has upgraded Datadog's stock rating from market perform to outperform, raising its price target significantly from $237 to $350, which implies a potential upside of approximately 42% based on Friday's closing price.
Analyst Peter Weed noted that data suggests a 50% quarter-over-quarter increase in enterprise token consumption among major AI Labs, particularly those categorized as 'Born in AI' customers. This growth is further supported by the release of consumer AI agents, which may increase observability requirements for traditional Datadog customers.
Bernstein's outlook aligns with the broader consensus, as 46 out of 49 analysts covering Datadog recommend a buy or strong buy. However, Weed expressed concerns about future competition from open-source solutions as AI Labs mature, although he believes this is not an immediate threat. Year-to-date, Datadog's shares have surged approximately 82%