What Happened?
Shares of cloud monitoring platform Datadog (NASDAQ: DDOG) jumped 5.4% in the morning session after Bernstein raised its price target on the stock to $170 from $147, while keeping an Outperform rating.
The investment firm pointed to "strong H2 cloud consumption trends" as a key reason for its positive outlook on the cloud monitoring company. Bernstein's analysis suggested that the second half of the year might see a notable increase in revenue, not counting business related to artificial intelligence. The firm also noted that market sentiment indicated that the worst-case scenario of customer loss related to OpenAI seemed unlikely in the near future. Following this analysis, the firm increased its growth forecasts for Datadog's core business for the rest of 2025 and for the fiscal years 2026-2027.
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What Is The Market Telling Us
Datadog’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 5.5% on the news that Wells Fargo initiated coverage of the company with an "Overweight" rating and a $190 price target. The firm pointed to the company's group of AI-native customers as a growth driver that was not fully appreciated by the market. Wells Fargo noted that revenue from these clients, not including OpenAI, had already passed the $100 million mark. The initiation was part of a broader move by Wells Fargo, which started covering several software companies it saw as well-placed to gain from AI-related growth.
Datadog is up 14.3% since the beginning of the year, and at $164.16 per share, it is trading close to its 52-week high of $168.65 from December 2024. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,599.
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