Datadog (NASDAQ:DDOG) shares appear on track for a strong session on Thursday following the announcement of some investor-pleasing – and a little surprising – news.
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Specifically, after the close on Wednesday, S&P Global revealed that the observability software specialist will be joining the S&P 500 Index, taking the place of Juniper Networks after its acquisition by HP Enterprise. Although many investors had anticipated that Robinhood or Applovin might be added, Datadog ultimately secured the spot. The change is set to take effect before the market opens on Wednesday, July 9.
Wedbush analyst and resident tech expert Daniel Ives says the preference for Datadog was based on the fact the company’s platform “continues to gain momentum within the observability space especially with AI front and center,” with the move “further validating the company’s growth story over the coming years.”
Amid the surge of “agentic AI sidekicks,” Datadog has zeroed in on innovation through its Bits AI platform, aiming to enhance the developer experience. The company has begun rolling out features like continuous background scanning to notify developers of potential issues, automated bug fix suggestions with traceable summaries, and new approaches to monitoring key metrics. These additions reflect the broader shift toward agentic AI, reinforced by Datadog’s recent partnership with OpenAI. At the same time, the company continues to invest strategically – both organically and through acquisitions – to “improve its position within this massive opportunity.”
From a software perspective, Datadog continues to be one of Ives’ “favorite names to own” while his latest checks suggest strong momentum as the “AI Revolution” gains traction. “We believe that DDOG is well-positioned to continue gaining share within the observability space with elevated usage for its AI cohort across its enterprise customer base as the company’s new go-to-market motion leads to elevated deal flow for advanced capabilities to monitor cloud migration and digital transformation projects,” the analyst summed up.
So, down to business, what does this all mean for investors? Ives maintained an Outperform (i.e., Buy) rating on the shares and raised his price target from $140 to $170, implying shares will post growth of 26% in the months ahead. (To watch Ives’ track record, click here)
It’s mostly Buys amongst Ives’ colleagues here too – 31, in total – while the addition of 6 Holds can’t detract from a Strong Buy consensus rating. However, following the news the shares look poised to take out the $139.58 average target. With this in mind, watch out for analyst price target hikes or rating downgrades shortly. (See Datadog stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.