Datadog (DDOG) is benefiting from a broad push into AI across large companies, a trend that outweighs concerns about customers trying to rein in usage, Truist Securities said Monday in a report.
While recent headlines have focused on AI cost controls, Truist said its industry feedback points to strong momentum behind adoption.
"In this environment, we believe that pure consumption-model companies like Datadog are poised to benefit," Truist said. The software company's model allows it to capture steady demand tied to expanding AI workloads, the report said.
Truist upgraded its rating on Datadog stock to buy from hold and raised its price target to $300 from $190.
In May, Datadog raised its full-year outlook after posting first-quarter results that topped Wall Street's expectations, driven by what CEO Olivier Pomel called an "additional secular growth driver" in AI.
Datadog's shares rose 1.2% in Monday trading. They have jumped 71% this year.
Truist said Datadog's core business remains strong, and its rapid product development is helping it win more customers as companies consolidate software vendors.
"Agentic AI adoption remains in early innings across enterprises globally, and increasing adoption of AI could accelerate growth further and push shares higher," the report said.
Recent updates from major AI companies also suggest Datadog's relationships with its biggest customers are stabilizing, easing earlier concerns about potential losses, Truist said.
Price: $232.54, Change: $+2.64, Percent Change: +1.15%
