DDOG Should I Buy
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Datadog Inc (DDOG) is a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. Despite some short-term technical weakness, the company's strong growth trends, leadership in AI-driven observability, and consistent analyst confidence make it a compelling long-term investment opportunity.
The technical indicators show a mixed picture. The MACD is positive but contracting, RSI is neutral at 43.277, and the moving averages are bearish (SMA_200 > SMA_20 > SMA_5). Key support is at 109.278, and resistance is at 130.502. The stock is currently trading near its pivot level of 119.89, suggesting limited downside risk in the short term.
Datadog reported 30% YoY sales growth in Q4 2025, driven by strong AI customer adoption.
Analysts maintain an overwhelmingly positive outlook, with 36 out of 48 analysts rating it as a Buy and an average price target suggesting a 47% upside.
The company is recognized as a leader in digital experience monitoring, with a growing addressable market projected at $52 billion.
Datadog's AI-driven solutions are seeing accelerating adoption, with 5,500 customers using at least one AI product, a 57% increase YoY.
EPS dropped by 13.33% YoY in Q4 2025, reflecting some margin pressures.
Gross margin slightly declined to 80.39%, indicating potential cost challenges.
The broader software sector has faced pessimism, with the State Street SPDR S&P Software & Services ETF down 20.58% YTD.
Options data shows slightly bearish sentiment with a Put-Call Volume Ratio of 1.15.
In Q4 2025, Datadog's revenue increased by 29.21% YoY to $953.19 million, showcasing strong growth. Net income rose by 2.13% YoY to $46.57 million, but EPS declined by 13.33% YoY to 0.13, reflecting some margin pressures. Gross margin remained strong at 80.39%, though slightly down by 0.09% YoY.
Analysts remain highly optimistic about Datadog, with multiple firms maintaining Outperform or Buy ratings despite lowering price targets due to broader market conditions. The average price target suggests a 47% upside, and analysts highlight Datadog's leadership in AI-driven observability and strong demand from both AI and non-AI customers.
