Datadog, Inc. (DDOG): A Bull Case Theory

We came across a bullish thesis on Datadog, Inc. (DDOG) on @bigbullcap on X (Twitter). In this article, we will summarize the bulls’ thesis on DDOG. Datadog, Inc. (DDOG)’s share was trading at $114.46 as of 23^rd May. DDOG’s trailing and forward P/E were 243.53 and 60.61 respectively according to Yahoo Finance.

Datadog (DDOG) continues to distinguish itself within the observability space through its consistent ability to innovate and scale across a growing suite of product offerings. According to Bank of America, one of Datadog’s most compelling attributes is its multi-product engine, which allows the company to layer new capabilities on top of its core infrastructure monitoring platform.

While management does not disclose precise annual recurring revenue (ARR) figures for each category, the firm has provided enough commentary over time to piece together a detailed breakdown across key areas including infrastructure monitoring, application performance monitoring (APM), log analytics, security, and emerging products. BofA’s granular analysis of these segments reveals a strong and diverse foundation of ARR contributors, suggesting that Datadog is less reliant on any single revenue stream and has multiple growth levers it can activate. Importantly, this product expansion has enabled deeper penetration across customer accounts, increasing net retention and stickiness.

The firm believes this diversified growth profile supports a bullish outlook, particularly with potential upside to the company’s 2025 revenue guidance. In refining its model, BofA notes that underlying trends in product attach rates and adoption trajectories for security and logs provide further confidence in acceleration potential. Given this backdrop and Datadog’s continued execution in delivering value across its observability and security portfolios, BofA reiterates its Buy rating and raises its conviction in the $170 price target. The path to upside is paved with incremental product adoption, operational leverage, and a robust innovation pipeline, reinforcing DDOG as a high-quality compounder in enterprise software.

Previously, we have covered Datadog, Inc. (DDOG) in November 2024 wherein we summarized a bearish thesis by Elliot on Substack. Since then, the stock is down 26%. However, the stock is expected give a turnaround and is already up 21.02% since April 2025.

Datadog, Inc. (DDOG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 83 hedge fund portfolios held DDOG at the end of the fourth quarter which was 71 in the previous quarter. While we acknowledge the risk and potential of DDOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than DDOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.