Datadog Rips Higher As AI Customers Fuel Revenue Acceleration

Shares of Datadog Inc (NASDAQ:DDOG) rallied in early trading on Thursday after the company reported upbeat first-quarter results. Here are the key analyst insights: Guggenheim Securities analyst Howard Ma maintained a Buy rating, while raising the price target from $175 to $225. KeyBanc Capital Markets analyst Eric Heath reiterated an Overweight rating, while lifting the price target from $155 to $225. Needham analyst Mike Cikos reaffirmed a Buy rating, while taking the price target higher from $155 to $225. Rosenblatt Securities analyst Blair Abernethy maintained a Buy rating, while raising the price target from $178 to $220. Check out other analyst stock ratings. Guggenheim Securities: Datadog's total revenues grew 32% year-on-year to $1.006 billion. They topped the consensus of $960 million, with management citing "broad-based strength.” Ma estimates total AI-native revenue at $133 million for the quarter, including around $88 million from OpenAI, up more than 90% year-on-year, and $45 million from other AI natives, up 240%. Datadog reported record sequential ARR addition, with management reporting a seven-figure and an eight-figure annualized AI deal with two of the world’s largest technology companies, the analyst stated. "We see Datadog ultimately growing 31% this year, including at least 34% in 2Q," he further wrote. KeyBanc Capital Markets: Datadog generated strong revenue acceleration driven by both AI-native and non-AI customers, Heath said. He cited three main positives: The company's increasing relevance with AI-natives customers The world's most advanced AI companies are choosing Datadog instead of developing solutions in-house or moving to a low-cost competitor AI training workloads being an additional market opportunity 3x sequential growth in spans from AI apps indicates that AI is moving into production with traditional enterprise and is being monitored Management guided to second-quarter revenues of $1.07-$1.08 billion, higher than consensus of $993 million and representing 7% sequential growth "well above the typical 3% q/q growth guide," the analyst further wrote. Needham: Datadog's second-quarter guidance reflects around 30% year-on-year revenue growth at the midpoint, suggesting "sustained trends and strong bookings," Cikos said. Highlighting strength among both AI-native and non-AI customers, the analyst mentioned that: Datadog won two large contracts during the quarter with the AI research divisions at two of the world’s leading technology companies. The AI-native customer cohort includes 22 customers who spend over $1 million annually and 5 who spend over $10 million annually. Datadog’s core non-AI customer cohort re-accelerated to mid-20% year-on-year growth. Rosenblatt Securities: Datadog's bookings grew 29% year-on-year to $1.025 billion. The company signed both large and small deals during the quarter, Abernethy said. The strong momentum continued in April. The company's second-quarter revenue outlook suggested around 30% year-on-year growth, he added. The company guided to 2026 revenue growth guidance of 25%-27%, higher than consensus of 20%, but implying a significant slowdown in the second half of the year, the analyst stated. The guidance appears "somewhat conservative, in our view," he further wrote. BofA Securities: Datadog reported strong first-quarter results and announced a second-quarter revenue growth outlook that "is equally impressive," Ikeda said. The recent outperformance suggests that revenue growth acceleration could continue, he added. "Datadog is executing very well and end-market demand is inflecting," the analyst wrote. DDOG Price Action: Shares of Datadog had risen by 3.12% to $194.62 at the time of publication on Friday.