Datadog RSI Drops to 16.9; Analyst Sees Strong AI Growth Potential
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 03 2026
0mins
Source: CNBC
- Oversold Stock Analysis: Datadog's relative strength index (RSI) has dropped to 16.9, the lowest among S&P 500 stocks, with shares down over 14% in the past month, indicating potential for a near-term rebound that may attract investor interest.
- Analyst Outlook: Despite risks and potential growth volatility associated with a large AI lab, Wells Fargo analyst Ryan MacWilliams believes Datadog's leadership in observability positions it as a key beneficiary in AI, projecting durable growth in 2026.
- Other Oversold Stocks: In addition to Datadog, Lamb Weston, Marathon Petroleum, CrowdStrike, and AutoZone are also considered oversold, presenting potential short-term rebound opportunities that reflect market volatility.
- Overbought Stock Warning: Molina Healthcare's RSI stands at 81.5, indicating overbought conditions; although the stock has surged over 8% recently, analysts caution it may face around 6% downside risk, advising investors to proceed with caution.
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Analyst Views on DDOG
Wall Street analysts forecast DDOG stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for DDOG is 207.39 USD with a low forecast of 140.00 USD and a high forecast of 255.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
33 Analyst Rating
30 Buy
3 Hold
0 Sell
Strong Buy
Current: 140.560
Low
140.00
Averages
207.39
High
255.00
Current: 140.560
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.
Datadog Stock Faces Market Pressure Amid AI Concerns
- Market Value Decline: Over the past year, Datadog's market value has decreased by approximately 7%, and since November 10, DDOG stock has plummeted nearly 29%, reflecting investor concerns over the AI bubble and excessive spending.
- Active Options Trading: Despite the poor performance of DDOG stock, investors are still engaging in options trading, particularly with OTM puts providing volatility insurance and ITM puts potentially used to protect long positions, indicating a cautious optimism about its future.
- Price Volatility Expectations: According to the Black-Scholes model, DDOG stock is projected to fluctuate between $123.10 and $159.76 for the February 20 options chain, indicating a 12.96% high-low spread relative to the current price, presenting potential trading opportunities for investors.
- Earnings Expectations and Strategy: Ahead of the upcoming fourth-quarter earnings report on February 10, investors might consider a 155/160 bull call spread, which could yield a maximum profit of $355, representing a nearly 245% return, thus providing a rational strategy to seek gains amid market volatility.
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