Wells Fargo launched coverage of Datadog shares with a bullish view and a head-turning price target.
Shares of Datadog (DDOG 8.33%) have risen about 7.2% as of 2:30 p.m. ET on Wednesday. The move follows a fresh analyst initiation from Wells Fargo analysts, who assigned an overweight rating and a $190 price target to the software company, framing Datadog as a key beneficiary as artificial intelligence (AI)-native start-ups and traditional enterprises ramp up their cloud workloads.
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A new bullish call and why it matters
Wells Fargo analysts Ryan MacWilliams and Chris Brazeau initiated coverage of Datadog with a $190 12-month price target, representing about 25% upside from where the stock is trading at the time of this writing. The analysts highlighted accelerating adoption of AI tools across software stacks — a backdrop that tends to increase the value of unified monitoring, logging, and security. That positioning aligns with Datadog’s strength in offering a unified platform that monitors applications, infrastructure, logs, and security all in one place — giving developers and information technology workers a single view of performance across massive cloud environments.
The enthusiasm also builds on a string of solid updates from Datadog. In the second quarter of 2025, revenue rose 28% year over year to $827 million and management raised full-year guidance. Additionally, large-customer metrics continued to expand, with about 3,850 customers at $100,000 or more in annual recurring revenue. This foundation of robust fundamentals helps explain why a bullish initiation can move the stock.
Investors should be cautious
But there’s good reason to view the analyst’s optimism with a skeptical eye. The stock currently has a price-to-sales multiple of about 17 — a premium that assumes continued mid-20s top-line growth and ongoing product expansion for the foreseeable future. That said, if Datadog sustains top-line growth rates similar to those it has been achieving recently while expanding its profit margins, it may live up to the stock’s valuation.
Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog. The Motley Fool has a disclosure policy.
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