Wall Street Splits on Datadog as Goldman Initiates Sell and Morgan Stanley Upgrades

Overview

• Goldman Sachs began coverage on January 12 with a Sell rating and a $113 price target, warning that 2026 could bring slower growth as customers optimize observability spend.
• Morgan Stanley upgraded Datadog to Overweight with a $180 target, citing improving growth trends and contributions from cloud security, database monitoring, and incident management.
• KeyBanc maintained an Overweight rating but cut its target to $170, pointing to lower peer multiples, caution on security budgets, and rising competitive risks.
• Recent notes flagged intensifying competition from Grafana, ClickHouse, Chronosphere (pending acquisition by Palo Alto Networks), CrowdStrike, and Snowflake, alongside a heightened AWS push into observability.
• Other January calls included Truist trimming its target to $140 (Hold) and RBC to $175 (Buy), while BTIG’s December outlook saw potential benefits from vendor consolidation and AI-driven workload growth.