As previously reported, Guggenheim downgraded Datadog (DDOG) to Sell from Neutral with a $105 price target citing the risk of potential significant optimization by OpenAI, which the firm believes to be Datadog’s largest customer. The firm believes that OpenAI’s observability software roadmap is shifting toward more cost efficient, in-house technologies and it contends that OpenAI may have already started to move off Datadog for log management onto its internally built solution, which the firm see being followed by the planned deprecation of other Datadog functions. Given this risk, the firm is modeling 17% growth for Datadog in Q4 in its “plausible scenario,” the analyst noted.
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