10 Must-Watch AI Stocks on Wall Street

8. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 72

Datadog, Inc. (NASDAQ:DDOG) is one of the 10 Must-Watch AI Stocks on Wall Street. On January 12, Goldman Sachs analyst Gabriela Borges assumed coverage on the stock with a Sell rating and a price target of $113.00. Firm analysts see 2026 as a pressure year for DDOG as competition intensifies and weighs on fundamentals.

“We assume coverage on Datadog with a Sell (from Buy) and 14% downside to our 12-month price target of $113.”

While Goldman Sachs views DDOG as a complete platform in Observability, the Total Addressable Market for Observability appears fragmented which can allow many companies to win.

Year 2026 may see competition intensifying for Datadog, with customers more focused on observability budget optimization. In particular, rising AI adoption is increasing data volumes and complexity, prompting customers to revisit their observability strategies.

Moreover, there is growing competition from names such as Grafana, Clickhouse, and Chronosphere, as well as Crowdstrike and Snowflake.

“Specifically: 1) AI adoption drives an increase in data volume and cardinality (unique dimensions per signal), likely prompting customers to revisit their observability strategy; 2) competitors such as Grafana, Clickhouse and Chronosphere (pending acquisition by Palo Alto Networks) are increasingly focused on capturing share in observability by optimizing customer observability budgets, including via driving lower Datadog bills; we think CrowdStrike and Snowflake (announced plans to acquire Observe on 1/8) could also choose to compete more intensely; 3) our industry conversations at AWS Reinvent in December 2025 suggest a heightened focus from Amazon to capture share of cloud observability budgets.”

Overall, the firm anticipates the industry to move towards a deflationary architecture where DDOG will either innovate toward more efficient technology or risk losing market share.

“While we do not take a view on any particular quarter, we expect these dynamics to drive slowing revenue growth and increased opex or M&A intensity, and weigh on the stock’s multiple.”

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