Mizuho Raises Price Targets for Cloudflare and Datadog, Strongly Recommends Palantir
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Mizuho analyst Greg Moskowitz raised price targets on Cloudflare and Datadog ahead of earnings season and named Palantir, Atlassian, and ServiceNow as his three top picks — arguing that software valuations have been depressed roughly 30% below the three-year average by AI-disruption fears, creating an attractive risk-reward setup.
How much did the targets move — and who got cut?
Cloudflare was raised from $260 to $310; Datadog jumped from $220 to $300 — increases of roughly 19% and 36%, respectively.
In cybersecurity, Fortinet went from $86 to $125 (+45%) and Rapid7 from $8 to $11 (+38%).
The lone downgrade: Microsoft, trimmed from $515 to $490. This means → Moskowitz sees this cycle's upside not in mega-cap platforms but in faster-growing mid-cap software names.
Which three stocks does he want to own into earnings?
Moskowitz named Palantir, Atlassian, and ServiceNow as the three best stocks to hold ahead of results.
The common thread: all three lead their niches — AI-driven data analytics, collaboration tools, IT service management — and tie directly to the AI-adoption trend.
In plain terms = the analyst is betting these three are most likely to show hard evidence in their numbers that "AI is actually driving revenue."
What does the industry survey say?
Mizuho's Q2 channel checks came in solid: public-cloud and consumption-based data points were strong, AI adoption remained steady, and cybersecurity demand improved quarter over quarter versus Q1.
SaaS — software sold as a cloud subscription — held up with no visible deterioration signal.
This reflects a market where enterprise IT budgets have not collapsed despite macro uncertainty — companies are still spending, just spending more selectively.
Valuations are 30% cheaper — so why is the market still hesitant?
Moskowitz notes that NTM EV/Sales — a ratio measuring how much the market pays per dollar of forward revenue — now sits about 30% below its three-year average for the software sector.
This means → on valuation alone, software stocks are at their cheapest level in nearly three years, and the risk-reward looks attractive.
But the structural overhang is clear: investors fear AI could upend the existing SaaS business model — if AI automates much of what subscription software does, why keep paying monthly fees? Whether earnings season can ease that concern is the market's key watch point.
Content is for reference only, not financial advice.