Bernstein upgraded Datadog to Outperform from Market Perform and raised its price target to $350 from $237, citing stronger-than-expected demand tied to artificial-intelligence workloads. Datadog shares rose about 4% in premarket trading after the call was published.
Analyst Peter Weed said alternative-data signals indicated token consumption at the largest AI laboratories had increased at least 50% quarter over quarter, with potentially faster growth among smaller AI-native companies. The analysis also pointed to the release of consumer AI agents as a possible source of additional usage.
The revised model does not assume additional growth from Datadog’s traditional customers or its existing platform, leaving that potential upside outside the forecast.
Datadog’s product expansion provides part of the backdrop for the revised view. Datadog said Scout was built to reduce inference costs, and that its engineering teams and a small group of customers were already using it in a closed preview before general availability.
The company also said the model was evaluated using simulations based on historical incidents and telemetry without customer data, alongside a separate third-party benchmark.