Datadog Inc (NASDAQ:DDOG) is set to join the S&P 500 index effective before the market opens on July 9, replacing Juniper Networks which was recently acquired by Hewlett Packard Enterprise (HPE).
On the news, shares of Datadog added 10% at about $148 in early trade on Thursday
The cloud monitoring and observability software company now has a market cap of about $51.3 billion.
Datadog was chosen to join the S&P 500 over other names speculated by the investment community, including Robinhood Markets Inc (NASDAQ:HOOD) and AppLovin Corp (NASDAQ:APP).
Analysts at Wedbush believe Datadog was chosen over these other companies as its platform continues to gain momentum within the observability space, especially with AI front and center.
“With the influx of agentic AI sidekicks, the company has focused intently on innovating through Bits AI as Datadog finds new opportunities to streamline the developer experience with products that leverage features like 24/7 background scanning to alert developers of issues, automated suggestions for bug fixes with summaries for traceability, and innovative stat monitoring methods,” they wrote.
“Datadog’s new products and features look to compliment agentic AI trends following the company’s recent partnership with OpenAI while investing strategically across organic and inorganic verticals to improve its position within this massive opportunity.”
Wedbush repeated its ‘Outperform’ rating on the company, raising its price target to $170 from $140 on increased confidence in Datadog’s ability to capitalize on its observability initiatives in the coming years.
“We believe that Datadog is well-positioned to continue gaining share within the observability space with elevated usage for its AI cohort across its enterprise customer base as the company’s new go-to-market motion leads to elevated deal flow for advanced capabilities to monitor cloud migration and digital transformation projects,” they wrote.