According to TheFly, Jefferies downgraded Datadog to ‘Hold’ from ‘Buy’ while raising its price target to $280 from $210.
- Jefferies said its thesis that Datadog would emerge as a leading beneficiary of the AI spending boom has largely played out during the first half of 2026.
- The firm said that the downgrade is driven by valuation rather than concerns about Datadog’s business.
- Jefferies added that it would become more constructive on the shares at a more attractive entry point.
Shares of Datadog Inc. (DDOG) have nearly doubled this year, but analysts at Jefferies are exercising caution about the company’s prospects ahead of the second-quarter (Q2) earnings due in the coming weeks.
According to TheFly, Jefferies downgraded Datadog to ‘Hold’ from ‘Buy’ while raising its price target to $280 from $210, implying an upside potential of about 5% from Monday’s closing price.
Datadog shares were down more than 2% in Tuesday’s pre-market trade.
Valuation, Not Fundamentals, Drives the Downgrade
Jefferies said its thesis that Datadog would emerge as a leading beneficiary of the AI spending boom has largely played out during the first half of 2026, with the stock having surged 94% year to date.
The firm said that the downgrade is driven by valuation rather than concerns about Datadog’s business. The firm argued that after the stock’s sharp rally, there is “little cushion for any execution slippage” if quarterly results or guidance fail to meet elevated investor expectations. The firm added that it would become more constructive on the shares at a more attractive entry point.
Datadog is set to report its Q2 earnings on Aug. 6, 2026. Wall Street expects the company to report earnings per share (EPS) of $0.58 on revenue of $1.08 billion, according to Fiscal.ai data.
Datadog reported EPS of $0.46 on revenue of $827 million during the same period a year ago.
Others On Wall Street Are More Optimistic
Not all analysts share Jefferies’ cautious stance. Barclays raised its price target on Datadog to $290 from $260 and maintained an ‘Overweight’ rating, saying infrastructure software companies like Datadog should continue benefiting from AI-driven demand.
The firm expects the company’s Q2 results to largely reflect the momentum seen in the first quarter (Q1), even if it’s still too early for most software-as-a-service companies to show a significant AI-driven revenue inflection.
Oppenheimer analysts also turned more bullish, lifting their price target to $300 from $220 while reiterating an ‘Outperform’ rating.
The firm expects Datadog to deliver revenue roughly 2% to 4% above consensus in Q2, citing stronger-than-expected customer consumption, robust AI tailwinds, growing adoption among AI-native customers and the recent Adaptive ML acquisition, which it believes strengthens the company’s long-term AI strategy.
Citizens was even more optimistic, raising its price target to $311 from $225 and maintaining an ‘Outperform’ rating. The firm said rapid advances in open-source AI models, mounting pressure to reduce AI costs and the widening gap between weaker software companies and AI infrastructure leaders continue to favor companies like Datadog heading into earnings.
What Retail Traders Think Of DDOG Stock
Retail sentiment on Stocktwits around Datadog trended in the ‘bearish’ territory at the time of writing.
DDOG stock is up 94% year-to-date and 81% over the past 12 months. The S&P 500 ETF (SPY) is up 18% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 24%.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<