Datadog (DDOG) Stock Forecast: Bernstein Downgraded, Benchmark Raised to $330; Which Side Is Right?

TradingKey - Datadog (NASDAQ: DDOG) shares ended near the $257 mark after a turbulent week. The stock was briefly buoyed by the market's excitement about AI in general. But it lost more than 4% as investors digested Bernstein's downgrading of the stock to Market Perform. Bernstein noted that while demand for AI services has increased recently, demand for traditional cloud monitoring products is declining. 

Bernstein also argued the firm might struggle to continue growing at current levels in 2026, given the comparisons and valuation it enjoys now. However, Benchmark has raised its price target to a Street-high $330 on the back of customer and partner checkouts. 

The company just posted its first $1 billion quarter in revenue. And on August 6, it'll release Q2 earnings. So now it's a wait-and-see moment as investors look at the results of this earnings season as a barometer for Datadog's ability to deliver strong customer growth in AI products. From a technical standpoint, however, any confirmation of another move higher after an above $272.50 close would take it to another high of $281.

Bernstein’s Downgrade vs Benchmark’s Street-High $330: The Non-AI Demand Question

Wall Street analysts remain divided on Datadog despite a strong run of momentum in AI over the last 12 months. As Bernstein said, "Datadog has been benefiting from AI workloads recently," even though demand for other cloud monitoring products is declining. The firm also thinks it's more difficult for Datadog to continue growing its business to current levels in 2026, and given its premium valuation today, it's more challenging.

But Benchmark is raising its price targets to a high of $330 on the Street. That's based on customer and partner feedback that has been positive overall. It noted the company had positive feedback from "a number of partners and customers." This includes its competitive moat in the observability market today. There are currently more than 33,000 Datadog customers today. And the company is still building its enterprise customer base with a monitoring platform that provides customers with a single pane of glass for infrastructure performance, observability, and cloud security. Institutional investor BlackRock is also bullish on Datadog stock. It substantially increased its holdings in the first quarter. This was despite insider selling.

What are the key things to watch as Datadog's earnings are released on August 6? There's a big difference between Bernstein's $226 price target and a $330 Street-high one from Benchmark. The difference shows just how uncertain Datadog's future growth will be. This, and the question about demand for its AI products versus non-AI observability, will be one that will be answered by earnings.

Bits AI and August 6 Earnings: The Next Growth Catalyst

This is what analysts are watching to see. At its DASH 2026 conference, it also launched more than 100 new AI-powered features and capabilities, highlighted by Bits AI agents. These autonomous AI capabilities include the ability to detect and investigate issues in a distributed application's performance, generate code, and validate software releases. And it includes the ability to automate remediation. That means the software is not only for infrastructure monitoring, which it is. But now it's an AI-powered operations software, too.

The company also strengthened its AI game through the Adaptive ML acquisition. That means it's also building its own proprietary AI models and intelligent automation tools. Now it needs to show how these AI products will drive demand from customers in the enterprise. Investors want to see strong revenue growth at high values. 

As well as margin expansion and commentary from management on the adoption of AI products and their monetization. A high uptake of Bits AI will be another signal that it deserves its premium valuation and that it'll drive more revenues in 2026.

DDOG Technical Analysis; Trendline at $257, Trigger $272.50 for the Week Ahead

The 4-hour timeframe shows Datadog bouncing off the uptrend, with RSI hovering around 56, suggesting neutral to bullish signals. Buyers seem to be holding the line around the $250 level, preserving the overall uptrend. A weekly close above $272.50 would suggest the bullish trend is intact and we could be heading toward $280.90. Conversely, a weekly close below $250.50 could invalidate the uptrend and make the immediate outlook bearish.

Datadog (DDOG) Price Chart - Source: Tradingview

Key Levels

• Buy Level: Close above $272.50
• Price Target: $280.90
• Stop Loss: Close below $250.50

The upcoming earnings on Aug. 6 is when investors will look at the rate of AI product adoption, enterprise demand, and management commentary on the second half of 2026.

Why Did Bernstein Downgrade Datadog?

Bernstein says Datadog's growth is mostly from AI, and that demand for cloud monitoring is soft. The firm also mentions the stock's lofty valuation and a less favorable growth comparison in the back half of 2026.

What Are Bits AI Agents?

Bits AI is Datadog's new portfolio of self-governing AI agents which automate software monitoring, incident response, test, remediation, and code. The aim is to transform Datadog into an AI-based operations management tool from observability software.

What to Look for at Datadog's Q2 Earnings

Analysts should focus on revenue growth, new enterprise customers, how AI products are doing, operating profit margins, and Q3 guidance for 2026. We'll be particularly focused on how well Bits AI is doing.

Bottom Line

Datadog is starting earnings with a lot of buzz on the AI side but the debate continues as to whether demand for conventional cloud monitoring can keep up. The company's growing AI portfolio that includes Bits AI and the recent Adaptive ML purchase provides ample potential long-term upside. Datadog's Aug. 6 earnings results will be crucial in figuring out if AI-fueled growth is enough to sustain Datadog's pricey valuation. Technically, we are looking for a confirmed close above $272.50 with a target of $280.90 while the $250.50 support level stays as a focal point.