Datadog's S&P 500 Debut, AI Growth Spark Analyst Upgrade — Is More Upside Ahead?

Zinger Key Points

BofA hikes Datadog’s price target to $175, calling S&P 500 entry a surprise catalyst and naming it a top Q3 pick.
Analyst sees Datadog as a long-term AI winner with 20%+ growth and strong free cash flow margins.
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BofAmerica Securities analyst Koji Ikeda maintained Datadog Inc DDOG with a Buy and raised the price target from $150 to $175 on Monday.

The S&P Dow Jones Indices announced on July 2, 2025, that software vendor Datadog was joining the S&P 500, effective July 9, 2025. Ikeda noted the announcement was a surprise and a positive catalyst.

Also Read: Datadog Tops Q1 Estimates, Raises Revenue Outlook, Flags Margin Pressure

The analyst said the stock gained 15% the following day during the shorter trading session ahead of the July 4 holiday.

Ikeda expects investors to stick with it. Ikeda also named Datadog one of its top 10 U.S. ideas for the third quarter of 2025 and one of their best small and mid-cap (SMID Cap) ideas for the second half of 2025.

The analyst reiterated his long-term AI beneficiary plus durable 20%+ revenue growth and 20%+ free cash flow margin profile bull thesis.

Now that it’s going to be a part of the S&P 500, Ikeda noted that investor awareness of this DevSecOps category leader will increase meaningfully.

The price target boost reflects increasing investor sentiment and the expansion of multiple infrastructure software peer groups. Ikeda noted the forecast factors in a premium to its infrastructure software peer group average, which is warranted given its revenue growth, free cash flow upside potential, and its DevSecOps category leadership.

Ikeda projected fiscal 2025 sales of $3.23 billion and EPS of $1.69.

DDOG Price Action: Datadog stock is down 1.52% at $152.79 at publication on Monday.

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