Datadog Faces Rising Competition from Chronosphere for OpenAI Business: UBS.

Datadog's observability platform for OpenAI may face increased competition from Chronosphere, according to UBS. Datadog is one of OpenAI's largest customers, but Chronosphere's growing presence in the market could pose a threat. UBS notes that some analysts have expressed concerns about Datadog's ability to maintain its market share in the face of rising competition.

Datadog's (NASDAQ:DDOG) observability platform, which is used by OpenAI, may face increasing competition from Chronosphere, according to UBS analysts. UBS notes that some Street analysts have conveyed a view that OpenAI plans to in-source their observability software needs and build a custom solution, potentially reducing Datadog's market share [1].

UBS analysts Karl Keirstead and Dean Marriott stated that while the risk of OpenAI building its own alternative to Datadog is low, the risk of competition from privately-held Chronosphere is high. UBS believes OpenAI is currently using both Datadog and Chronosphere for GPU observability, but they do not foresee this posing a near-term threat to Datadog's growth or margins. UBS reiterated its Buy rating on Datadog and increased its price target to $165 from $140 [1].

Last week, Datadog was added to the S&P 500, highlighting its growing momentum in the observability space, particularly with AI applications [1]. However, the potential competition from Chronosphere could imply pricing pressure for Datadog.

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[1] https://seekingalpha.com/news/4468072-datadog-faces-rising-competition-from-chronosphere-for-openai-business-ubs