15 Software Stocks With the Highest Upside Potential

3. Datadog, Inc. (NASDAQ:DDOG)

Potential Upside: 73.58%

Number of Hedge Fund Holders: 72

In the first week of January, a number of financial services firms issued significant updates on the company. On January 7, Truist Financial analyst Miller Jump lowered its price target for the shares from $195 to $140. However, he reiterated his Hold rating on the stock. His downwardly revised price target implies a further 14.5% upside from current levels as of January 10. This upside is the same as the lowest estimate from Wall Street analysts.

In addition to Truist Financial, RBC Capital also cut its price target for the firm from $216 to $175 on January 5. Analyst Matthew Hedberg of RBC Capital revised the price target for the stock while maintaining a Buy rating. His adjusted price target represents a further 43% upside from the current levels.

However, on December 13, BTIG provided a 2025 review and 2026 outlook, and analysts led by Gray Powell added the stock to their 2026 list of favored names in security and infrastructure software.

Analyst Gray Powell and his team highlighted:

”We remain positive on the observability space. We see customers prioritizing vendor consolidation, benefiting both DDOG and Dynatrace. Vendors should see tailwinds from the proliferation of workloads from AI.”

Datadog, Inc. (NASDAQ:DDOG) operates a security and observability platform for cloud applications across the United States and internationally. Its products include log management, database monitoring, digital experience monitoring, data observability, continuous profiler, and more.