Guggenheim said Datadog could become popular due to growing demand for solutions that help developers work with artificial intelligence models. The investment firm has upgraded its software platform provider from neutral to purchasing. They also set a price target of $175 on the stock, implying a 50.2% upside from Wednesday’s closing price. “Based on our industry research and research, we believe Datadog will be a key beneficiary of AI-driven growth in data volume and IT complexity,” analyst Howard Marr said in a note to clients. Datadog offers several tools that provide security, performance, and cost insights to help developers troubleshoot and improve their applications. DDOG YTD Mountain DDOG Year-to-date As part of its offerings, the company also offers large-scale language model observability, a tool for monitoring AI models trained on large datasets to assess their behavior and performance. Guggenheim said these types of products and Datadog’s AI-powered autonomous or semi-autonomous services could drive Datadog’s stock price higher. “The observability of AI…and the increased sales capabilities and productivity are all potential avenues for the upside,” Ma wrote. The analyst added that Datadog derives significant revenue contributions from multiple products, including Bits AI, an AI-powered agent that helps engineers investigate and remediate incidents in production. He also noted that Datadog has a “sophisticated backend architecture that is deeply moated against competition and the potential for commoditization through[large-scale language models].” Mr. Guggenheim’s call is consistent with Wall Street consensus. According to LSEG, 44 of the 49 analysts covering Datadog rate the stock as a buy or strong buy. The stock is down 16% since the beginning of the year, underperforming the broader market.
