KeyBanc Capital Markets has lowered its price target on Datadog (NASDAQ:DDOG) to $155.00 from $170.00, though the brokerage preserved an Overweight rating on the shares. Datadog is currently trading at $119.66, and has experienced a sharp pullback in the last week, dropping almost 15% according to InvestingPro data.
The stock still sits within the range of analyst targets, spanning $113 to $260, and the consensus recommendation overall remains strongly tilted toward Buy. Yet KeyBanc’s updated note centers on the company’s guidance cadence for fiscal 2026 and how that guidance incorporates both the trajectory of Datadog’s core business and the revenue contribution from OpenAI.
KeyBanc frames the situation this way: for management to deliver the type of outlook investors expect, Datadog would likely need to replicate the pattern seen in the third quarter - namely, an acceleration in core business growth combined with steady revenue from OpenAI. The firm points out that even if Datadog delivers a similar 4% beat to what it has achieved in prior quarters, the company’s opening guidance for 2026 may have to be more conservative than current consensus estimates.
Investors will get a clearer picture when Datadog reports earnings on February 10. Ahead of that print, KeyBanc suggests that if management follows its historical approach to setting annual revenue guidance for the core business, that guidance could assume high-teens revenue growth for the core line.
A central variable in KeyBanc’s view is OpenAI. The note identifies OpenAI as a potentially material and volatile contributor - one that could represent as much as $300 million in revenue and account for roughly 90% of Datadog’s AI-native customer segment. The sensitivity to OpenAI’s growth path is a primary reason KeyBanc lowered its price target while staying constructive on the company’s competitive positioning.
Supporting the bullish elements of the story, InvestingPro data highlights Datadog’s strong top-line performance: revenue rose 26.63% over the last twelve months, bringing total revenue to $3.21 billion. The company also retains exceptionally high gross profit margins, near 80%, a metric that KeyBanc and other analysts have flagged as a structural strength.
However, KeyBanc’s research note models an alternate scenario in which guidance assumes flat growth for OpenAI. In that case, total revenue guidance could slide to a mid-to-high teens percentage increase, versus KeyBanc’s own estimate of 20% and the street consensus centered around 21% growth. That divergence underscores the sensitivity of headline growth to assumptions about OpenAI’s contribution.
Investor sentiment, according to KeyBanc, remains mixed. Analysts and investors continue to praise Datadog’s innovation and leadership in observability and monitoring, yet there are mounting questions about pricing pressure from competitors such as Palo Alto Networks, intensifying rivalry with data platform vendors, and the possibility of OpenAI-related customer churn.
The note arrives amid a broader set of analyst views that vary significantly on Datadog’s near and medium-term prospects. Guggenheim expects Datadog to report accelerating revenue growth for the fourth quarter of 2025 - projecting a 29% increase compared with 28% in the prior quarter. Its outlook calls for core revenue to accelerate to 22% from 20% in Q3, with AI-native revenue seen growing roughly 130% year-over-year.
On the ratings front, DA Davidson reiterated a Buy rating and kept a $225 price target, pointing to AI momentum as a key positive. BMO Capital trimmed its price target to $170, citing caution around fiscal 2026 guidance and the risk of shifts in OpenAI’s workload. Scotiabank reduced its target to $180 and also highlighted OpenAI’s outsized role in Datadog’s revenue run rate. Bernstein maintained an Outperform rating with a $180 target while noting market chatter about a potential GitLab acquisition. These differing stances illustrate how analysts are splitting on the company’s growth drivers and the durability of its AI-related revenue.
Bottom line: KeyBanc’s decision to cut the price target reflects a cautionary stance tied to guidance assumptions, specifically how management will model core growth and how OpenAI’s revenues are treated. The stock remains under pressure, and the upcoming February earnings release will be a key inflection point for clarity on 2026 expectations.