Datadog stock price target raised to $320 by RBC on revenue outlook

Investment firm RBC Capital boosted its price target for Datadog shares (NASDAQ:DDOG) to $320 from $280 on Monday, while keeping an "Outperform" rating. At the time of writing, the stock was trading at $291.47, just 1% below its 52-week high of $294. The firm anticipates Datadog to report third-quarter revenue growth of 34% to 35%, surpassing its previous estimate of 28.7%, which marks a slight slowdown from the 36% growth seen in the second quarter.

Over the past year, Datadog has generated approximately $4 billion in revenue, boasting an impressive gross profit margin of 79.5%. The company has exhibited five consecutive quarters of accelerating revenue growth before the expected deceleration. Analysts at RBC Capital caution that the upcoming quarter may present more challenging year-over-year comparisons, attributing this to a decrease in OpenAI usage.

They factor in increased caution due to these trends, though they remain optimistic if this pattern reverses or persists at the same rate. The stock has experienced a modest 116% gain year-to-date and a 178% surge over the last six months since Datadog's second-quarter earnings report. Despite the recent share price rise, RBC Capital views the current situation favorably.

An analysis by InvestingPro indicates that the stock is presently overvalued relative to its intrinsic value, with the next earnings report due in 24 days. Notably, Datadog has garnered attention from multiple analysts recently, with firms like Yorkville Ives and FBN Securities initiating or maintaining positive ratings, setting price targets between $325 and $335.

Wedbush also initiated coverage with an "Outperform" rating and a $275 price target, acknowledging Datadog's accelerated revenue growth of 36% year-over-year in the second quarter of fiscal 2026. Mizuho has maintained its "Outperform" rating with a $300 price target following discussions with Datadog's senior investor relations team.

Stifel has retained a "Buy" rating and a $305 price target, recognizing the significant spending on Datadog by OpenAI, averaging $80 million to $85 million per quarter in fiscal year 2025. These updates emphasize the prevailing positive outlook from analysts on Datadog's current performance and future potential.