BofA Raises Price Target on Datadog (DDOG) to $150 Amid Strong AI Momentum

Datadog, Inc. (NASDAQ:DDOG) is one of the 10 AI Stocks in the Spotlight. On June 18, BofA analyst Koji Ikeda raised the firm’s price target on the stock to $150 from $138 and kept a “Buy” rating on the shares. The firm has termed Datadog as a “top pick” for the second half of 2025, backed by its strong execution, healthy demand trends, and growing role in AI infrastructure.

“We believe it’s positioned to drive durable 20%+ revenue growth and 20%+ FCF margins over the long-term (i.e., Rule-of-40+), which is an attractive investment trait.” -BofA analysts wrote.

The analysts further affirmed that they are confident about Datadog based on positive checks at the company’s annual customer conference, DASH, along with positive results from the firm’s recent Datadog survey. Both suggest strong customer momentum. The firm believes Datadog has the potential to drive 20%-plus revenue growth as well as 20%-plus free cash flow margins over the long term.

“75% of customers we spoke with at DASH are planning to spend more with Datadog.”

According to the firm, the company is also benefiting from the AI boom.

“Revenue generated from AI-natives is already notable, with 8.5% of ARR coming from them (+200% y/y, we estimate).” BofA said.

As more traditional enterprises launch AI-enabled experiences, the analysts anticipate broader adoption and benefits from the AI boom.

Datadog also unveiled multiple new products at DASH, with the firm anticipating that they have the potential to become $100 million+ ARR contributors. These include tools aligned with AI agents, automation, and deep observability into the AI tech stack.

“We believe the strong execution trend will continue driving potential upside to our/Street forecasts.”

Datadog, Inc. (NASDAQ:DDOG) offers a cloud-based SaaS platform for monitoring and analytics, specializing in cloud computing and AI-powered cybersecurity products.

While we acknowledge the potential of DDOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.