Datadog (DDOG) is one of the most compelling artificial intelligence infrastructure plays in software right now, and Wall Street is starting to say it louder. Wedbush Securities added Datadog to its closely watched AI 30 list on Friday, a curated group of stocks the firm believes are best positioned to capitalize on the ongoing artificial intelligence buildout.
The move is a meaningful signal for investors still hunting for durable AI winners beyond the usual chip and hyperscaler names.
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Wedbush said Datadog "stands out as a second-derivative beneficiary of the AI revolution. The firm pointed to the growing need for companies to monitor, secure, and optimize their AI workloads as the core driver.
www.barchart.com"We believe DDOG is increasingly well-positioned to capitalize on this multi-year shift as AI and cloud workloads continue to scale," the analysts said.
Why Datadog Is Winning the AI Infrastructure Race
Datadog does not build large language models or sell graphics processing units. Instead, the company provides observability and security tools to engineering teams.
Think of it as the dashboard that shows you what is happening inside your software, your cloud infrastructure, and your artificial intelligence applications, all in one place. If something breaks or slows down, Datadog is usually the first to know.
AI applications are multiplying fast, but they are also complex and prone to failure. Every company deploying AI in production needs to know if it is performing as expected, if it is secure, and whether end users are getting value from it. Datadog sits right at that intersection.
The company posted 32% year-over-year revenue growth in its most recent quarter, marking its fourth consecutive quarter of acceleration. It is a remarkable achievement at a roughly $4 billion annual revenue run rate. CEO Olivier Pomel noted at the J.P. Morgan technology conference earlier this month that every part of the business accelerated, not just the AI native cohort.
Larger, older enterprises are also spending more with Datadog and are modernizing to compete in an AI-driven world. Even some of the biggest hyperscalers, companies with virtually unlimited engineering talent and strong incentives to build their own tools, have become Datadog customers.
Datadog Still Has Enormous Room to Grow
Here is the part that often gets overlooked: Despite its momentum, Datadog still holds only about 13.6% of the broader IT operations management market, according to the research firm Gartner. That number might sound modest, but it tells you just how early this story still is.
The company is the market leader in observability, but a vast majority of the market still could modernize and adopt its platform.
Add to that the emergence of artificial intelligence as a brand-new category requiring observability, security, and performance monitoring, and the total addressable market is expanding as Datadog takes share within it.
Wedbush's inclusion on the AI 30 list reflects that longer view. It is a bet that the shift toward AI-powered cloud infrastructure is a multi-year cycle, and that the companies providing the essential plumbing around it will compound value steadily over time.
For investors looking for AI exposure without betting on who wins the model race, Datadog offers something rare: a business growing at over 30% with a widening competitive moat, strong customer retention, and a market still in its early innings.
www.barchart.comIs Datadog Stock Undervalued?
Analysts tracking DDOG stock forecast revenue to increase from $3.43 billion in 2025 to $9.56 billion in 2030. In this period, adjusted free cash flow is projected to improve from $910 million to $3.5 billion.
If Datadog stock is priced at 40x forward FCF, which is below its three-year average of 58x, it could surge over 80% within the next four years.
Out of the 45 analysts covering Datadog stock, 39 recommend “Strong Buy,” three recommend “Moderate Buy,” two recommend “Hold,” and one recommends “Strong Sell.” The average Datadog stock price target is $222.30, which is similar to the current price target.
On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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