MoffettNathanson reiterated a Buy rating and $255 price target on Datadog (NASDAQ: DDOG), arguing that the stock's recent decline created an attractive entry point.

The firm said Datadog delivered one of the strongest quarters in its coverage universe during the 2025 earnings season, driven by accelerating AI-native workloads. Despite this performance, the stock fell sharply following its November all-time high, coinciding with broader investor caution toward AI-related equities.

MoffettNathanson noted that Datadog was on track to finish 2025 with negative returns despite strong fundamentals, describing the selloff as swift and severe. The analyst said the pullback appeared overdone and presented a compelling buying opportunity heading into 2026.

The firm said Datadog remained well positioned to benefit from ongoing cloud adoption and the increasing complexity of IT environments driven by generative AI, while cautioning that macroeconomic conditions remained challenging.