Bernstein continues to recommend Datadog Inc. (NASDAQ: DDOG) with an Outperform rating, carrying a price target of $180.00. This valuation represents substantial upside in comparison to Datadog’s current trading price of approximately $131.25. Despite market enthusiasm fueled by chatter of a possible acquisition of GitLab, Bernstein’s proprietary Fair Value model indicates that the stock may currently be priced above its intrinsic value.
Recent movement in the market has seen Datadog's stock experience an unusual downturn at the same time GitLab's shares have gained. This trend appears to be linked to speculation about Datadog potentially securing GitLab. Datadog’s robust market capitalization of $46.03 billion, coupled with a strong current ratio of 3.66, signifies the company's substantial financial capability to pursue acquisitions if desired.
Nevertheless, analyst Peter Weed from Bernstein expressed reservations regarding the feasibility of such a deal, stating it "doesn’t make a lot of sense" based on the firm's detailed evaluations. This skepticism aligns with discussions Bernstein conducted with Datadog's management during the company's third-quarter earnings call, where leadership underscored a strategic preference for smaller, targeted acquisitions rather than large-scale purchases.
The firm’s research note further emphasized Datadog's commitment to enhancing its existing technological offerings internally. Efforts are concentrated on advancing the CI Visibility suite and Code Security functionalities, which resemble GitLab-adjacent capabilities. This approach points towards organic growth strategies rather than engaging in an acquisition to incorporate similar products.
Looking ahead, finance houses like Guggenheim anticipate Datadog to accelerate its revenue growth to 29% in the fourth quarter of 2025, up from 28% recorded in the prior quarter. Concurrently, Stifel has elevated its rating on Datadog to Buy, attributing this upgrade to expectations of a stronger-than-anticipated performance driven by robust core business expansion and AI sector stability. Similarly, TD Cowen boosted the price target to $200 while maintaining a Buy stance, forecasting the company to surpass its own guidance of 24% growth.
Despite mounting competitive pressures in the cloud infrastructure space, Bernstein continues to view Datadog favorably, positioning it as a premier investment option in the sector for the first half of 2026. Moreover, the company has publicized plans to host an Investor Day scheduled for February 12 in New York City, providing both in-person and virtual participation options. This event is expected to offer deeper insight into Datadog’s strategic direction and operational performance.
Overall, the combination of bullish analyst sentiment, measurable financial strength, and strategic investment in product development indicates positive momentum for Datadog as the company positions itself for future growth within the technology sector. Investors and market watchers will undoubtedly focus closely on the upcoming earnings release to assess how these narratives translate into financial outcomes.