Taking Stock of Dynatrace (DT) Valuation After New AWS Partnership and AI Observability Updates

Dynatrace (DT) just rolled out a packed update on its expanding AWS partnership, from new AI observability tools to fresh public sector awards, giving investors a clearer view of where its cloud growth story is headed.

See our latest analysis for Dynatrace.

The AWS updates come after a choppy stretch for the stock, with a year to date share price return of minus 15.29 percent and a one year total shareholder return of minus 15.38 percent. However, a three year total shareholder return of 18.97 percent suggests the longer term cloud observability story is still intact even as near term momentum has cooled.

If Dynatrace's AWS driven growth has your attention, this could be a good moment to explore similar trends playing out across high growth tech and AI stocks.

With revenue still growing double digits, a solid profit base, and the stock trading at roughly a one third discount to analyst targets, is Dynatrace an overlooked AI observability winner, or is the market already pricing in its AWS fueled upside?

Most Popular Narrative Narrative: 24.6% Undervalued

With Dynatrace closing at $46.04 against a narrative fair value of $61.06, the story leans heavily toward upside potential grounded in long term cloud demand.

The company's unified platform approach, particularly the growing success of Grail-powered log management (over 100% YoY log consumption growth and targeting $100M in annualized consumption), is driving multi-product adoption and higher customer stickiness, which should improve net retention rates, recurring revenue, and long-term earnings predictability.

Read the complete narrative.

Curious how steady customer expansion, moderating margins, and a rich future earnings multiple can still justify a premium valuation signal? Explore the narrative playbook behind that price.

Result: Fair Value of $61.06 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained competitive pressure and lengthening enterprise deal cycles could quickly challenge the bullish AWS-driven upside and compress the premium valuation narrative.

Find out about the key risks to this Dynatrace narrative.

Build Your Own Dynatrace Narrative

If you see the story differently or simply prefer running your own numbers, you can spin up a custom view in under three minutes, Do it your way.

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding Dynatrace.

Ready for your next investing move?

Before you move on, set yourself up for the next win by using the Simply Wall St Screener to uncover focused ideas you will not want to miss.

• Capitalize on potential mispricings by targeting companies flagged as undervalued using these 908 undervalued stocks based on cash flows tailored for value driven investors.
• Ride the powerful trend in automation and machine learning by zeroing in on forward looking innovators highlighted in these 26 AI penny stocks.
• Lock in potential income streams by filtering for dependable payouts through these 13 dividend stocks with yields > 3% focused on yields above 3 percent.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com