06:29 AM EDT, 07/03/2025 (MT Newswires) -- Datadog's ( DDOG ) stock jumped early Thursday after it was announced that the software maker will be joining the S&P 500 next week, a move that Wedbush Securities said validates the company's continued growth in offering observability through monitoring and scanning.

The software maker will replace Juniper Networks (JNPR) in the benchmark equity index, effective before the market opens July 9, S&P Global (SPGI) division S&P Dow Jones Indices said late Wednesday. The adjustment follows Hewlett Packard Enterprise's ( HPE ) acquisition of Juniper Networks on the same day.

Shares of Datadog ( DDOG ) climbed more than 10% in the most recent premarket activity.

The company's upcoming inclusion in the S&P 500 over names such as Robinhood (HOOD) and AppLovin ( APP ) shows continued momentum of its platform within the observability space, particularly with artificial intelligence front and center, Wedbush said in a Thursday client note.

The brokerage said the firm has focused sharply on innovation through its Bits AI offering, amid an influx of AI systems composed of agents. The company's new products and features compliment agentic AI trends -- where autonomous systems make decisions and take actions without human intervention -- following its recent partnership with Microsoft-backed (MSFT) OpenAI.

It's also making strategic investments across organic and inorganic verticals to strengthen its position, according to Wedbush.

"On the software front, Datadog ( DDOG ) remains one of our favorite names to own and our recent checks have been very strong as the AI revolution takes hold," Wedbush analysts including Daniel Ives wrote in the note.

Datadog ( DDOG ) is well placed to continue to gain market share within the observability space, amid high usage of its AI offerings across an enterprise consumer base, the brokerage said. The company's new go-to-market motion is expected to lead to more deal flow for cloud migration monitoring and digital transformation projects, Ives added.

Wedbush maintained its outperform rating on Datadog's ( DDOG ) stock and raised the 12-month price target to $170 from $140, reflecting "incremental confidence" in the company's ability to capitalize on its observability initiatives over the coming years.