11:33 AM EST, 11/07/2025 (MT Newswires) -- Datadog's ( DDOG ) core business, excluding OpenAI, accelerated in Q3, driving 28% year-over-year revenue growth that topped expectations and signaled a "durable" rebound across its customer base, Morgan Stanley said in a report Friday.

Although Datadog's ( DDOG ) valuation remains high at about 14 times projected 2027 sales, the sustained acceleration in its core business could drive the stock higher over the next year, with the initial 2026 outlook being the main near-term "hurdle," the report said.

"While debate around OpenAI has dominated," the improvement, which continued into October, was fueled by rising product "usage growth," new customer additions, expanded monetization, and better go-to-market execution, Morgan Stanley said.

The investment bank views the broad-based rebound as evidence that Datadog's ( DDOG ) underlying business has regained strength even as OpenAI's growth contribution likely peaked following a new contract with more favorable pricing.

Morgan Stanley maintained an equal weight rating on Datadog ( DDOG ) and raised its price target to to $180 from $165.

Shares of the company were down more than 4% in recent Friday trading.

Price: 183.21, Change: -7.61, Percent Change: -3.99