Investing.com -- Jefferies cut Datadog to Hold from Buy on Tuesday, citing valuation concerns after the stock's sharp rally this year, even as the firm maintained its fundamental view of the company as an AI beneficiary. Analyst Brent Thill told investors that the firm's "thesis on the company being an AI beneficiary and category leader has largely played out in 1H26, with shares up +94% YTD on strong execution and growth re-accelerating from 25% in 1Q25 to 32% in 1Q26." The downgrade came as part of a broader Q2 preview in which Jefferies said the market is "transitioning away from indiscriminate negative positioning toward a more fundamentals-&-estimates-driven setup." The firm favored Amazon, Microsoft and Atlassian heading into earnings, citing stronger cloud and AI momentum with achievable targets, while turning negative on Palantir due to "escalating comps and competition." Related articlesJefferies downgrades Datadog after 94% YTD rallyNvidia hits the gas: Next-gen "Vera Rubin" AI chips enter full productionMoonshot AI eyes $50 billion valuation, Hong Kong IPO after Kimi K3 breakthrough