Goldman Sachs Assumes Datadog (DDOG) at Sell downgrades from Buy

Goldman Sachs analyst Gabriela Borges assumes coverage on Datadog (NASDAQ: DDOG) with a Sell rating and a price target of $113.00.

The analyst comments: "We assume coverage on Datadog with a Sell (from Buy) and 14% downside to our 12-month price target of $113. We view Datadog as one of the most complete platforms in Observability with a strong track record of delivering customer value, and the Observability TAM is fragmented so many companies can win. However, we expect 2026 to be a year where competition intensifies and customers are more focused on observability budget optimization, which is likely to pressure Datadog’s fundamentals. Specifically: 1) AI adoption drives an increase in data volume and cardinality (unique dimensions per signal), likely prompting customers to revisit their observability strategy; 2) competitors such as Grafana, Clickhouse and Chronosphere (pending acquisition by Palo Alto Networks) are increasingly focused on capturing share in observability by optimizing customer observability budgets, including via driving lower Datadog bills; we think CrowdStrike and Snowflake (announced plans to acquire Observe on 1/8) could also choose to compete more intensely; 3) our industry conversations at AWS Reinvent in December 2025 suggest a heightened focus from Amazon to capture share of cloud observability budgets. Taken together, we expect the industry to evolve to a more deflationary architecture: Datadog will likely either have to innovate into a more efficient tech stack and pricing model, or will capture less share. While we do not take a view on any particular quarter, we expect these dynamics to drive slowing revenue growth and increased opex or M&A intensity, and weigh on the stock’s multiple."

For an analyst ratings summary and ratings history on Datadog click here. For more ratings news on Datadog click here.

Shares of Datadog closed at $125.49 yesterday.

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