diff --git a/testing/integration/k8s/k8s.go b/testing/integration/k8s/k8s.go
index de30897e14a..229b0ad3b03 100644
--- a/testing/integration/k8s/k8s.go
+++ b/testing/integration/k8s/k8s.go
@@ -7,7 +7,7 @@ package k8s
 import "path/filepath"
 
 const (
-	KubeStackChartVersion         = "0.9.1"
+	KubeStackChartVersion         = "0.10.5"
 	KubeStackChartName            = "opentelemetry-kube-stack"
 	KubeStackChartNameWithVersion = KubeStackChartName + "-" + KubeStackChartVersion
 	KubeStackChartArchiveName     = KubeStackChartNameWithVersion + ".tgz"
diff --git a/testing/integration/k8s/otel_helm_test.go b/testing/integration/k8s/otel_helm_test.go
index 8c258a12941..6c4a0aedd31 100644
--- a/testing/integration/k8s/otel_helm_test.go
+++ b/testing/integration/k8s/otel_helm_test.go
@@ -43,7 +43,6 @@ func TestOtelKubeStackHelm(t *testing.T) {
 		},
 		Group: define.Kubernetes,
 	})
-	t.Skip("https://github.com/elastic/elastic-agent/issues/10020: Constantly failing test")
 
 	kCtx := k8sGetContext(t, info)
 
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/Chart.yaml b/testing/integration/k8s/testdata/opentelemetry-kube-stack/Chart.yaml
index f8c09590d42..463ab7bac30 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/Chart.yaml
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/Chart.yaml
@@ -34,4 +34,4 @@ name: opentelemetry-kube-stack
 sources:
 - https://github.com/open-telemetry/opentelemetry-operator
 type: application
-version: 0.9.1
+version: 0.10.5
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/_config.tpl b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/_config.tpl
index 2fd14821a59..241de30c44f 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/_config.tpl
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/_config.tpl
@@ -17,7 +17,7 @@ the config is written as YAML.
 {{- $_ := set $collector "config" $config }}
 {{- end }}
 {{- if .collector.presets.logsCollection.enabled }}
-{{- $_ := set $collector "exclude" (printf "/var/log/pods/%s_%s*_*/%s/*.log" .namespace (include "opentelemetry-kube-stack.collectorFullname" .) (.Chart.Name | lower)) }}
+{{- $_ := set $collector "exclude" (list (printf "/var/log/pods/%s_%s*_*/otc-container/*.log" .namespace (include "opentelemetry-kube-stack.collectorFullname" .))) }}
 {{- $config = (include "opentelemetry-kube-stack.collector.applyLogsCollectionConfig" (dict "collector" $collector) | fromYaml) -}}
 {{- $_ := set $collector "config" $config }}
 {{- end }}
@@ -41,7 +41,7 @@ the config is written as YAML.
 {{- $config = (include "opentelemetry-kube-stack.collector.applyClusterMetricsConfig" (dict "collector" $collector "namespace" .namespace) | fromYaml) -}}
 {{- $_ := set $collector "config" $config }}
 {{- end }}
-{{- toYaml $collector.config | nindent 4 }}
+{{- tpl (toYaml $collector.config) . | nindent 4 }}
 {{- end }}
 
 {{/*
@@ -110,6 +110,7 @@ processors:
     - sources:
       - from: connection
     extract:
+      otel_annotations: true
       metadata:
         - k8s.namespace.name
         - k8s.pod.name
@@ -130,19 +131,14 @@ processors:
         - container.image.tag
         - container.image.name
         - k8s.cluster.uid
+        - service.namespace
+        - service.name
+        - service.version
+        - service.instance.id
       labels:
-      - tag_name: service.name
-        key: app.kubernetes.io/name
-        from: pod
-      - tag_name: service.name
-        key: k8s-app
-        from: pod
       - tag_name: k8s.app.instance
         key: app.kubernetes.io/instance
         from: pod
-      - tag_name: service.version
-        key: app.kubernetes.io/version
-        from: pod
       - tag_name: k8s.app.component
         key: app.kubernetes.io/component
         from: pod
@@ -239,7 +235,7 @@ receivers:
 {{- define "opentelemetry-kube-stack.collector.clusterMetricsConfig" -}}
 {{- $disableLeaderElection := .collector.presets.kubernetesEvents.disableLeaderElection}}
 {{- if not $disableLeaderElection}}
-{{- include "opentelemetry-kube-stack.collector.leaderElectionConfig" (dict "name" .electorName "leaseName" "k8s.cluster.receiver.opentelemetry.io" "leaseNamespace" .namespace)}}    
+{{- include "opentelemetry-kube-stack.collector.leaderElectionConfig" (dict "name" .electorName "leaseName" "k8s.cluster.receiver.opentelemetry.io" "leaseNamespace" .namespace)}}
 {{- end}}
 receivers:
   k8s_cluster:
@@ -317,7 +313,8 @@ receivers:
     exclude: []
     {{- else }}
     # Exclude collector container's logs. The file format is /var/log/pods/<namespace_name>_<pod_name>_<pod_uid>/<container_name>/<run_id>.log
-    exclude: {{ .exclude }}
+    exclude:
+    {{- toYaml .exclude | nindent 4 }}
     {{- end }}
     start_at: end
     retry_on_failure:
@@ -347,7 +344,7 @@ receivers:
 {{- define "opentelemetry-kube-stack.collector.kubernetesEventsConfig" -}}
 {{- $disableLeaderElection := .collector.presets.kubernetesEvents.disableLeaderElection}}
 {{- if not $disableLeaderElection}}
-{{- include "opentelemetry-kube-stack.collector.leaderElectionConfig" (dict "name" .electorName "leaseName" "k8s.objects.receiver.opentelemetry.io" "leaseNamespace" .namespace)}}    
+{{- include "opentelemetry-kube-stack.collector.leaderElectionConfig" (dict "name" .electorName "leaseName" "k8s.objects.receiver.opentelemetry.io" "leaseNamespace" .namespace)}}
 {{- end}}
 receivers:
   k8sobjects:
@@ -368,4 +365,4 @@ extensions:
     auth_type: serviceAccount
     lease_name: {{ .leaseName }}
     lease_namespace: {{ .leaseNamespace }}
-{{- end }}
\ No newline at end of file
+{{- end }}
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/collector.yaml b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/collector.yaml
index 88ee47d9061..1e7ce7e2c8d 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/collector.yaml
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/collector.yaml
@@ -1,7 +1,7 @@
 {{ range $_, $collector := $.Values.collectors -}}
 {{- if $collector.enabled -}}
 {{- $collector := (mergeOverwrite (deepCopy $.Values.defaultCRConfig) $collector) }}
-{{- $merged := (dict "Template" $.Template "Files" $.Files "Chart" $.Chart "clusterRole" $.Values.clusterRole "collector" $collector "Release" $.Release "fullnameOverride" $.Values.fullnameOverride "presets" $.Values.presets "namespace" (include "opentelemetry-kube-stack.namespace" $)  "kubelet" $.Values.kubelet) }}
+{{- $merged := (dict "Template" $.Template "Files" $.Files "Chart" $.Chart "clusterRole" $.Values.clusterRole "collector" $collector "Release" $.Release "fullnameOverride" $.Values.fullnameOverride "presets" $.Values.presets "namespace" (include "opentelemetry-kube-stack.namespace" $)  "kubelet" $.Values.kubelet "clusterName" $.Values.clusterName) }}
 {{- $fullname := (include "opentelemetry-kube-stack.collectorFullname" $merged) }}
 ---
 apiVersion: opentelemetry.io/v1beta1
@@ -90,7 +90,7 @@ spec:
   {{- end }}
   {{- with $collector.affinity }}
   affinity:
-  {{- toYaml . | nindent 4}}
+  {{- tpl (toYaml .) $merged | nindent 4}}
   {{- end }}
   {{- with $collector.lifecycle }}
   lifecycle:
@@ -108,10 +108,18 @@ spec:
   updateStrategy:
   {{- toYaml . | nindent 4}}
   {{- end }}
+  {{- if eq $collector.mode "daemonset" }}
+  {{- with $collector.daemonSetUpdateStrategy }}
+  daemonSetUpdateStrategy:
+  {{- toYaml . | nindent 4}}
+  {{- end }}
+  {{- end }}
+  {{- if eq $collector.mode "deployment" }}
   {{- with $collector.deploymentUpdateStrategy }}
   deploymentUpdateStrategy:
   {{- toYaml . | nindent 4}}
   {{- end }}
+  {{- end }}
   {{- if or ($collector.presets.logsCollection.enabled) ($collector.presets.logsCollection.storeCheckpoints) ($collector.presets.hostMetrics.enabled) ($collector.volumeMounts) }}
   volumeMounts:
   {{- if $collector.presets.logsCollection.enabled }}
@@ -133,7 +141,7 @@ spec:
     mountPropagation: HostToContainer
   {{- end }}
   {{- with $collector.volumeMounts }}
-  {{- toYaml . | nindent 2 }}
+  {{- tpl (toYaml .) $merged | nindent 2 }}
   {{- end }}
   {{- end }}
   {{- with $collector.ports }}
@@ -203,7 +211,7 @@ spec:
       path: /
   {{- end }}
   {{- with $collector.volumes }}
-  {{- toYaml . | nindent 2 }}
+  {{- tpl (toYaml .) $merged | nindent 2 }}
   {{- end }}
   {{- end }}
   {{- with $collector.initContainers }}
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/hooks.yaml b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/hooks.yaml
index da63300f6bc..031412d86b7 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/hooks.yaml
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/templates/hooks.yaml
@@ -69,10 +69,9 @@ spec:
         {{- else }}
         image: "{{ $.Values.cleanupJob.image.repository }}:{{ $.Values.cleanupJob.image.tag }}"
         {{- end }}
-        command:
-          - /bin/sh
-          - -c
-          - |
-            kubectl delete instrumentations,opampbridges,opentelemetrycollectors \
-              -l helm.sh/chart={{ include "opentelemetry-kube-stack.chart" . }}
+        args:
+          - "delete"
+          - "instrumentations,opampbridges,opentelemetrycollectors"
+          - "-l"
+          - "helm.sh/chart={{ include "opentelemetry-kube-stack.chart" . }}"
 {{- end }}
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.schema.json b/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.schema.json
index 6b99132c7d1..20171cf6180 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.schema.json
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.schema.json
@@ -473,7 +473,7 @@
       "additionalProperties": false,
       "type": "object"
     },
-    "DeploymentStrategy": {
+    "DeploymentUpdateStrategy": {
       "properties": {
         "type": {
           "type": "string"
@@ -1673,8 +1673,11 @@
         "updateStrategy": {
           "$ref": "#/$defs/DaemonSetUpdateStrategy"
         },
+        "daemonSetUpdateStrategy": {
+          "$ref": "#/$defs/DaemonSetUpdateStrategy"
+        },
         "deploymentUpdateStrategy": {
-          "$ref": "#/$defs/DeploymentStrategy"
+          "$ref": "#/$defs/DeploymentUpdateStrategy"
         }
       },
       "additionalProperties": true,
@@ -1768,6 +1771,20 @@
         },
         "scrapeConfigSelector": {
           "$ref": "#/$defs/LabelSelector"
+        },
+        "allowNamespaces": {
+          "type": "array",
+          "items": {
+            "type": "string"
+          },
+          "description": "List of namespaces to allow for scraping"
+        },
+        "denyNamespaces": {
+          "type": "array",
+          "items": {
+            "type": "string"
+          },
+          "description": "List of namespaces to exclude from scraping"
         }
       },
       "additionalProperties": false,
diff --git a/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.yaml b/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.yaml
index 2e3745c1d41..f99263d520e 100644
--- a/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.yaml
+++ b/testing/integration/k8s/testdata/opentelemetry-kube-stack/values.yaml
@@ -17,8 +17,8 @@ cleanupJob:
   enabled: true
   # Image details for the kubectl
   image:
-    repository: bitnami/kubectl
-    tag: latest
+    repository: rancher/kubectl
+    tag: v1.34.1
     # When digest is set to a non-empty value, images will be pulled by digest (regardless of tag value).
     digest: ""
   # To use the existingServiceAccount
@@ -243,6 +243,14 @@ defaultCRConfig:
   #   scrapeConfigSelector:
   #     key1: value1
   #     key2: value2
+  #   # List of namespaces to allow for scraping
+  #   allowNamespaces:
+  #     - namespace-1
+  #     - namespace-2
+  #   # List of namespaces to exclude from scraping
+  #   denyNamespaces:
+  #     - namespace-3
+  #     - namespace-4
   # securityContext:
   #   runAsUser: 1000
   #   capabilities:
@@ -307,10 +315,18 @@ defaultCRConfig:
   #   metrics:
   #     enableMetrics: true
 
-  # Update strategy for the collector
+  # NOTE: the updateStrategy value is deprecated. Use daemonSetUpdateStrategy instead.
   updateStrategy: {}
   #   type: RollingUpdate
 
+  # Update strategy for the DaemonSet collector
+  daemonSetUpdateStrategy: {}
+  #   type: RollingUpdate
+
+  # Update strategy for the Deployment collector
+  deploymentUpdateStrategy: {}
+  #   type: RollingUpdate
+
   # Volume mounts for the collector
   volumeMounts: []
   #   - name: data