Truist Just Upgraded Datadog Stock. Here's Why.

Truist Securities upgraded Datadog (DDOG) to “Buy” on Monday morning, while simultaneously raising its price target to $300, signaling potential upside of nearly 30% from current levels. 

The upgrade was driven by analyst Miller Jump’s recent fieldwork, which revealed significant incremental positives about the company's positioning within the enterprise AI adoption cycle.

Jump’s core thesis is that enterprises are prioritizing AI adoption over cost optimization of artificial intelligence-related workloads, and clients remain in the early phases of their agentic AI journeys, both of which bode well for DDOG’s consumption-based revenue model.

Note that Datadog stock is already trading about 70% above its price at the start of this year, reflecting enthusiasm around AI-driven demand tailwinds.

Why Truist Upgraded Datadog Stock

A key element of the Jump’s upgrade involves greater clarity around Datadog’s relationships with frontier AI labs, which had been a key overhang on the stock. 

Investor concern had centered on OpenAI potentially migrating workloads away from Datadog’s observability platform to competitors such as Chronosphere. 

However, at the firm’s recent DASH conference, OpenAI’s Head of Product and Platform indicated that the ChatGPT company doesn’t trust its own internal analytics dashboards and relies on DDOG for accurate live traffic metrics. 

Moreover, OpenAI now deploys agents on top of Datadog’s observability data to replace manual monitoring, deepening the integration rather than signaling a departure.

What Else Could Drive DDOG Shares Higher?

Jump’s base case assumes OpenAI’s spending on Datadog will decline by about 50% between fiscal year 2025 and 2027, but he expects Anthropic’s ramp-up to largely offset this decline. 

This view reduces what Jump previously considered the most probable near-term risk to the bullish case. 

In his research note, the Truist analyst also expressed conviction in momentum from DDOG’s non-AI-native customer base, projecting fiscal 2027 top-line growth of 25%, significantly higher than the 20.5% consensus. 

Note that DDOG shares are currently testing their 20-day moving average (MA). A decisive break above the $233 level could accelerate bullish momentum in the near-term. 

How Wall Street Recommends Playing Datadog Inc

The broader Wall Street consensus on Datadog shares remains a “Strong Buy,” with 39 “Strong Buy” ratings and only one “Sell.” 

However, the average price target across analysts stands at nearly $235, signaling the stock is near fair value at current levels.