Datadog Inc. (Datadog (DDOG)) shares climbed on Monday as investors rotated back into growth stocks and a bullish analyst upgrade reinforced confidence in the cloud software company's artificial intelligence opportunity.

The tech-heavy Nasdaq gained 2.9%, while the S&P 500 advanced 1.8%.

Truist Upgrade Boosts Sentiment

Adding to the positive backdrop, Datadog received a bullish upgrade from Truist Securities, which raised its rating to Buy from Hold and increased its price forecast to $300 from $190.

The firm upgraded the stock after conducting industry checks and attending Datadog's DASH conference. Truist said enterprise demand for AI adoption continues to outpace efforts to optimize AI spending, creating a favorable environment for Datadog's consumption-based business model.

The analyst also cited greater confidence in Datadog's relationships with major AI customers, including OpenAI and Anthropic.

Truist expects the rise of agentic AI applications to increase demand for telemetry and observability tools over time. The firm forecasts fiscal 2027 revenue growth of 25%, above the FactSet consensus estimate of 20.5%.

The $300 price forecast implies roughly 30% upside from Datadog's June 12 closing price.

The stock carries a Buy rating with an average price forecast of $235.77. Recent analyst moves include:

• Truist Securities: Upgraded to Buy (Raises Target to $300.00) (June 15)
• TD Cowen: Buy (Raises Target to $260.00) (June 11)
• Macquarie: Outperform (Maintains Target to $230.00) (June 11)

Tech Rally Lifts Datadog

Datadog's gains were supported by both the analyst upgrade and improving market sentiment. Investors continued to favor software and cloud-computing stocks as risk appetite strengthened across equity markets.

Market breadth remained positive, with most sectors trading higher. However, Datadog still trailed the broader technology sector. While the stock gained about 1.7%, the Technology sector advanced roughly twice as much.

Technical Trend Remains Strong

Datadog continues to trade in a strong long-term uptrend. Shares remain about 57% above their 200-day simple moving average and nearly 33% above their 50-day moving average. The stock has gained almost 93% over the past 12 months.

The bullish trend is supported by a golden cross that formed in May, when the 50-day moving average moved above the 200-day moving average.

However, momentum indicators suggest the pace of gains may be slowing. The moving average convergence divergence (MACD) indicator remains below its signal line, pointing to weaker short-term momentum.

Key resistance sits near $278.50, just below the stock's 52-week high.

Price Action

DDOG Stock Price Activity: Datadog shares were up 2.64% at $235.98 at the time of publication on Monday, according to market data.