Wedbush Securities’ senior analyst Dan Ives believes Datadog (DDOG) has significant room to the upside as the stock rallies on stellar Q1 earnings.
On Thursday, the cloud-based observability platform reported a blockbuster $1.1 billion revenue, a 32% year-on-year increase that comfortably cleared the $960 million analysts had pencilled in.
On the bottom line, adjusted EPS hit $0.60 in the first quarter, also crushing the $0.51 consensus.
Including the post-earnings rally, Datadog stock is up more than 75% versus its low in early April.
Wedbush raises price target on Datadog stock
Dan Ives maintained his “outperform” rating on DDOG shares today and raised his price target to $220, indicating potential upside of another 17% from here.
In his research report, the Wedbush analyst characterized Datadog as a “core pillar” of the modern enterprise stack, especially as firms transition from experimental AI pilots to full-scale production deployments.
According to him, Datadog Inc exceeding $1 billion in quarterly revenue is a “watershed moment” that validates its platform-centric strategy.
Datadog isn’t just benefiting from general cloud migration; it’s capturing high-velocity spend from AI-native and traditional Fortune 500 firms, which require deep observability into complex, GPU-heavy workloads.
Note that DDOG currently sits handily above its key moving averages (MAs) – with an RSI in the early 80s indicating intense buying pressure.
Why else is Ives bullish on DDOG shares
The Wedbush report further emphasized the quality of Datadog’s growth, pointing to a 21% annual increase in high-value customers – those generating over $100,000 in Annual Recurring Revenue (ARR).
DDOG now has roughly 33,200 customers in total, with larger enterprise clients leading the charge.
Despite this rapid scaling, the business maintained an exceptional gross profit margin of some 80% – a figure Ives describes as “best-in-class” for the broader software sector.
These metrics indicate Datadog’s land-and-expand model is working perfectly, as customers who initially join for infrastructure monitoring are rapidly adopting newer modules like Bits AI Security Agent and Cloud Security.
Datadog shares remain in a sharp uptrend because this effectively boosts the lifetime value of every new logo added to the platform.
How to play Datadog after its Q1 earnings
Looking ahead, Wedbush Securities sees the remainder of 2026 as a period of sustained acceleration for Datadog.
The company’s guidance for the full year remains robust (up to $4.3 billion in revenue), supported by record-breaking new bookings and a “clear visibility” into the spending pipeline of major cloud providers.
Ives maintains that DDOG stock is uniquely positioned at the intersection of cybersecurity and observability, two of the most resilient pockets of IT spending in the current macroeconomic environment.
With $4.8 billion in cash and marketable securities on the balance sheet, the Nasdaq-listed firm also has the financial firepower to continue out-innovating competitors.
Wedbush concludes that for investors looking to play the AI revolution through a profitable, high-growth software leader, Datadog remains a top-tier opportunity even after this week’s rally.
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