Investing.com -- Truist Securities upgraded Datadog to Buy from Hold on Monday and lifted its price target to $300 from $190, as the broker’s fieldwork pointed to durable AI-driven growth and easing concerns around the company’s relationship with its largest customers.

Analyst Miller Jump said the rating change, while consensus, was driven by differentiated underlying work conducted at Datadog’s DASH user conference and other industry events.

He highlighted two key takeaways — enterprises prioritizing AI adoption over cost optimization, and the improved stability of Datadog’s relationships with frontier lab customers.

"Despite increased awareness around AI consumption, we believe urgency of AI adoption in the enterprise is significantly outweighing the urgency to optimize AI, and customers remain early in their agentic journeys," Jump wrote.

A key overhang on the stock has been uncertainty around OpenAI, which became Datadog’s largest customer in under two years but has faced speculation about migrating workloads to rival observability platforms.

At DASH, OpenAI’s Head of Product and Platform said the company does not trust its internal analytics dashboards and relies on Datadog as its source of truth for live traffic metrics, adding that his team now deploys agents on top of that observability data to replace manual monitoring.

Jump said it came away expecting OpenAI to maintain use cases across both Datadog and Chronosphere, rather than fully churning. In its base case, Truist models OpenAI’s Datadog spend declining by half between fiscal year-end 2025 and 2027, with Anthropic’s ramp expected to offset that reduction.

On the broader growth picture, Jump argued that the recent acceleration in Datadog’s non-AI-native customer base — driven by vendor consolidation, stronger enterprise sales execution, and coding agents compressing migration timelines — is only the first leg of a longer runway.

The analyst sees a second, larger leg ahead as enterprises move from simple call-and-response AI interactions toward fully agentic workflows that generate significantly more telemetry data and require denser observability tooling.

“Increased visibility into the stability of relationships with frontier labs mitigates risk around what we see as the most likely near-term risk to the bull thesis,” Jump wrote.

“As such, we see opportunity for continued upside momentum in shares,” he added.

Truist’s fiscal 2027 (FY27) revenue growth estimate of 25% sits well above the FactSet consensus of 20.5%, a gap the firm attributed to its more constructive view on non-AI-native growth durability.

Shares trade at 20x the firm’s FY26 revenue estimate, a premium to peers that Jump said is justified given Datadog’s positioning in the AI consumption path.