Morgan Stanley Upgrades Datadog with Optimistic Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 31 2026
0mins
Should l Buy DDOG?
Source: CNBC
Datadog Inc's stock rose by 3.62% and reached a 20-day high amid positive market conditions, with the Nasdaq-100 up 0.43% and the S&P 500 up 0.31%.
Morgan Stanley analysts have upgraded Datadog to an Overweight rating with a price target of $180, citing strong underlying momentum and predicting revenue growth could exceed 30% in the upcoming quarter. This optimistic outlook is expected to positively influence investor sentiment and stock performance if the company meets or exceeds these expectations.
The upgrade from Morgan Stanley reflects a broader recovery in market confidence for software stocks, suggesting that Datadog is well-positioned to capitalize on the anticipated growth in public cloud spending and software development.
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Analyst Views on DDOG
Wall Street analysts forecast DDOG stock price to rise
33 Analyst Rating
30 Buy
3 Hold
0 Sell
Strong Buy
Current: 129.740
Low
140.00
Averages
207.39
High
255.00
Current: 129.740
Low
140.00
Averages
207.39
High
255.00
About DDOG
Datadog, Inc. provides an observability and security platform for cloud applications. The Company’s SaaS platform integrates and automates infrastructure monitoring, application performance monitoring, log management, user experience monitoring, cloud security and many other capabilities to provide unified, real-time observability and security for its customers’ entire technology stack. Its platform consists of products that can be used individually or as a unified solution and includes a marketplace where customers can access products built by its partners on top of the Datadog platform. Its products include Infrastructure Monitoring, Application Performance Monitoring, Log Management, Digital Experience Monitoring, Continuous Profiler, Database Monitoring, Data Observability, Universal Service Monitoring, Network Monitoring and others. It owns Metaplane, an end-to-end data observability platform that provides advanced machine learning-powered monitoring and column-level lineage.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strong Economic Data: March retail sales rose by 1.7% month-over-month, exceeding expectations of 1.4%, marking the largest increase in a year, indicating robust consumer spending that may support stock prices.
- Oil Price Recovery: WTI crude oil prices rebounded by over 2% as market speculation intensified regarding Iran's participation in upcoming peace talks, potentially exacerbating the global energy crisis.
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- Earnings Season Performance: By April 17, 10% of S&P 500 companies had reported Q1 earnings, with 88% exceeding EPS expectations and 84% surpassing revenue forecasts, indicating robust financial health that is likely to attract more investor interest.
- Signs of Earnings Recovery: Morgan Stanley's chief U.S. equity strategist, Michael Wilson, noted that despite geopolitical risks, the earnings recovery remains intact, primarily driven by positive operating leverage, suggesting growing market confidence in economic recovery.
- Potential Winners: Analysts at Morgan Stanley believe companies like DraftKings and Datadog are poised to exceed expectations on key performance indicators, with DraftKings expected to excel in adjusted EBITDA and Datadog likely to surprise on revenue, enhancing their competitive positions in the market.
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- Model Request Failure Rate: Approximately 5% of AI model requests fail in production, with nearly 60% of these failures attributed to capacity limits, leading to slowdowns and errors in AI applications, which adversely affect user experience and business operations.
- Multi-Model Adoption: OpenAI holds a 63% market share as the most widely used AI provider, while adoption rates for Google Gemini and Anthropic Claude have increased by 20 and 23 percentage points respectively, reflecting market recognition of multi-model strategies.
- Need for Real-Time Visibility: To remain competitive in the rapidly evolving AI landscape, organizations require real-time visibility across the entire tech stack, from GPU utilization to model behavior, ensuring that speed does not compromise reliability and governance.
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- CLEAR Secure Performance: CLEAR Secure's stock surged 5.9%, with a year-to-date increase of 63.4%, now priced at $56.19 per share, marking a new 52-week high, reflecting strong market confidence in its future growth potential.
- Analyst Support: Bernstein reiterated an 'Outperform' rating for ServiceNow, highlighting its role as a foundational AI agent platform for business process automation, which further bolstered market confidence in the software sector.
- Investment Opportunities: The market's overreaction to price drops in high-quality stocks presents good buying opportunities, especially as SaaS names have become significantly oversold in the context of a fragile market rebound.
See More
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- Software Stocks Lead: High-growth companies like Datadog and ServiceNow spearheaded the rebound, with Atlassian's stock rising 5.6%, Wix's stock increasing by 9.5%, and Asana's stock up 5.4%, reflecting optimistic market sentiment regarding their future growth potential.
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- AI Application Prospects: In the AI sector, certain companies are gaining attention, as some trade at undervalued prices while leveraging AI for revenue generation, highlighting that the market has yet to fully recognize the potential opportunities in AI applications.
See More
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- Oil Price Surge Impacts Markets: The S&P 500 index fell 0.24%, the Dow Jones Industrial Average dropped 0.01%, and the Nasdaq 100 index declined 0.31% on Monday as WTI crude prices surged over 6%, indicating market sensitivity to rising energy costs amid geopolitical tensions.
- Geopolitical Risks Escalate: The closure of the Strait of Hormuz by Iran has raised market concerns, especially following U.S. Navy actions against Iranian tankers, which could exacerbate global oil and fuel shortages, further unsettling investor sentiment.
- Earnings Season Continues: So far, 81% of the 48 S&P 500 companies that reported earnings exceeded expectations, with Q1 earnings projected to rise 12% year-over-year; however, excluding the tech sector, growth is only expected at 3%, highlighting signs of economic weakness.
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