Dynatrace (DT) has a stronger organic growth setup for fiscal 2027, with larger contract renewals, potentially higher AI observability spending and a healthy pipeline of large deals, UBS Securities said.

About 70% of upcoming renewals are expected in H2, with some contracts likely to be larger because customers are using more products than when they first signed three-year agreements, the investment firm said in a Sunday note.

UBS expects AI-generated data to lift customer spending by about 10% to 20% over the next two to three years, adding roughly 3 to 5 percentage points to growth, with most of the benefit expected from fiscal 2028 onward, according to the research note.

Dynatrace does not appear to have another eight-figure new customer deal in its near-term pipeline, but the overall pipeline remains healthy with many large deals still possible.

UBS kept its buy rating on the stock, with a $65 price target.

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