Datadog, Inc. (NASDAQ:DDOG) is currently one of the AI Stocks capturing market attention. On October 8, Bernstein increased its price target for the stock from $147 to $170 while maintaining an “Outperform” rating on the shares.
The firm has noted a rebound in Datadog following a summer dip, which comes as no surprise given various indicators suggesting a potential increase in base revenue, excluding AI, in the latter half of the year.
Investors appear to be less concerned about the possibility of Datadog losing business to OpenAI in the near future, contributing to a more optimistic outlook.
“Strong trends in cloud consumption for H2; In recent weeks, we have observed Datadog (and a broader range of cloud-related consumption software) recover after a mid-summer slump. Many signals indicate that H2 could see a significant uptick in base revenue, excluding AI.”
“Additionally, given the current market sentiment, the worst-case scenario regarding OpenAI churn appears improbable in the short term (consistent with our previous predictions), providing reasons for cautious optimism. Based on our web metrics analysis, we are adjusting our expectations for the growth of the ex-AI segment for H2 and FY26–27, while the AI component remains relatively stable. Utilizing a balanced 50/50 ‘rule of 40’ based multiples regression (~15x Price to Next Twelve Months revenue, up from ~14x), along with our DCF (11% WACC, 3% terminal growth), we update our price target to $170 and retain an Outperform rating.”
Datadog, Inc. (NASDAQ:DDOG) provides a cloud-based SaaS solution for monitoring and analytics, focusing on cloud computing and AI-driven cybersecurity offerings.
While we see promise in DDOG as a potential investment, we note that certain AI stocks may offer a more favorable risk-reward ratio. For those interested in looking at an undervalued AI stock poised to profit from the impacts of tariffs from the Trump era and trends toward onshoring, take a look at our free report on the most promising short-term AI stock.
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