By Kit Norton
Datadog shares surged on Wednesday, making it one of the top S&P 500 performers during the session, as analysts say the software company remains a "must own."
A TD Cowen analyst team, led by Andrew Sherman, late Tuesday cut its Datadog price target from $215 to $190, but maintained a Buy rating on the stock.
The analysts expect Datadog to beat first-quarter guidance and raise its 2026 outlook when the company reports financials in late April.
Datadog currently forecasts first-quarter earnings between 49 cents and 50 cents a share, up from 46 cents a share a year ago. For 2026, the software company also currently expects profit ranging from $2.08 to $2.16 a share.
The fourth quarter was highlighted by Datadog announcing an eight-figure deal with a leading AI model, which Sherman speculates is Anthropic. The analyst wrote that the AI model's use of Datadog is likely to "ramp strongly" this year.
Datadog sells a monitoring and analytics platform to artificial-intelligence and cloud giants like Amazon Web Services and OpenAI.
Separately, Truist on Wednesday also lowered its Datadog price target to $120 from $140 but kept a Hold rating on the stock. The firm noted that following a strong end to 2025, it sees potential for AI-driven demand momentum to carry into 2026 as broader-based utilization trends persist.
Datadog shares jumped 8% to $119.35 on Wednesday, making it one of the top S&P 500 stocks in the session. Robinhood Markets, DoorDash, and Tesla rounded out the top performers in the index.
For comparison, the S&P 500 rose 0.4% and the Dow Jones Industrial Average declined 0.3%.
Datadog is down 12% so far this year and is 40% below its all-time closing high of $199.72 from November 10, 2025, according to Dow Jones Market Data. Software and technology stocks have broadly sold off to start 2026.
"We see an attractive entry point for an AI beneficiary," Sherman wrote of Datadog. "Sentiment has improved and we see this as a must-own."
Write to Kit Norton at kit.norton@barrons.com
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April 15, 2026 12:13 ET (16:13 GMT)
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