Bernstein lowers DDOG rating amid slowing demand and expected earnings deceleration in Q3 and Q4.
Bernstein downgraded Datadog (NASDAQ:DDOG) to Market Perform from Outperform, despite raising its price target to $226 from $180. The firm cited concerns over tough earnings comparisons starting in Q3, driven by slowing demand across enterprises and AI labs.
Non-AI revenue, which accounts for 85% of Datadog’s total, is expected to peak in Q3 before declining by 100 basis points in Q4. Bernstein also warned of a potential 500-basis-point drop in growth rate to 29% in Q4, below investor consensus estimates of 30%-40%.
The downgrade reflects broader worries about decelerating growth in cloud observability and security platforms, particularly as macroeconomic pressures persist.