Datadog's (DDOG) expanding AI roadmap and stepped-up security strategy position the company for sustained long-term growth, with room for estimates to move higher through the year, RBC Capital Markets said Friday in a report.

RBC called Datadog an "AI beneficiary," saying its product plans strengthen the business and widen its market opportunity. The company's security products, now generating more than $100 million in annual recurring revenue, remain a largely untapped opportunity among larger customers.

Growth drivers highlighted at Datadog's investor day included ongoing digital-transformation and cloud-migration trends, rising use of generative-AI applications, strong customer retention and expansion, and the move into adjacent areas such as software delivery, service management and product analytics, the report said.

RBC also highlighted Datadog's sales focus, noting the company is deepening ties with cloud providers and other partners to help drive bigger enterprise wins.

Management reiterated its long-term operating-margin target of roughly 25%. RBC models earnings of $2.12 on revenue of $4.08 billion in 2026 and EPS of $2.46 on revenue of $4.86 billion in 2027.

RBC maintained its outperform rating on Datadog stock with a price target of $161.

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