Datadog Has A 'Clear Vision On AI,' Says Bullish Analyst

Datadog Inc (NASDAQ:DDOG) shares were climbing in early trading on Monday, just a couple of weeks after the company received an upgrade from BofA Securities analyst Koji Ikeda.

The latest investor meeting reaffirmed the company's strong AI position, which complements its long-term growth potential of more than 20%, according to Goldman Sachs.

The Datadog Analyst: Kash Rangan maintained a Buy rating and price target of $143 on the stock.

The Datadog Thesis: The company has a "clear vision on AI," Rangan said in the note.

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Management indicated that the hyperscaler growth witnessed in the first quarter "is attributable to AI value largely accruing at the infrastructure layer as limited GPU capacity comes online for model training (where Datadog has less exposure)," the analyst wrote.

Management has plans to expand the company beyond model providers "as more use cases emerge and inferencing workloads grow," he added.

With Gen-AI expected to increase data quantity and complexity, CEO Olivier Pomel believed "Datadog's core applications (ITIM, APM, Logs) should capitalize on this durable tailwind," Rangan stated. "Further, with a new category of AI-enabled applications emerging, the CEO noted that new tooling will be required, which Datadog is investing against," he further said.

DDOG Price Action: Shares of Datadog rose by 3.801% to $112.82 at the time of publication on Monday.

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