Wells Fargo upgrades Datadog on end of cloud cost optimization

Wells Fargo upgraded Datadog to Overweight from Equal Weight with a price target of $150, up from $130. With the company’s cloud cost optimization coming to an end, Datadog “has many ways” to drive upside in fiscal 2024, including vendor consolation, security cross-sell and generative artificial intelligence. The firm says Datadog is wining larger deals as customers consolidate vendors, and larger deals have an outsized impact on bookings. Wells believes generative AI could account for 10% of the company’s annual recurring revenue in fiscal 2025 and says management’s plan to accelerate hiring in fiscal 2024 should drive growth in 2025.