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BMO Capital Markets zahájila pokrývání společnosti Lululemon Athletica (-4,2 %) s doporučením „Underperform" a cílovou cenou 70 USD. Analytici z Citi přistoupili ke snížení cílové ceny u této společnosti ze 130 USD na 117 USD a ponechali doporučení „Neutral“.
Index S&P 500 -0,35 % na 7646,52 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Energie +0,9 % Zbytná spotřeba -1,1 % Informační technologie -0,1 % Průmysl -0,9 % Zdravotní péče -0,2 % Nezbytná spotřeba -0,8 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Marvell Technology (MRVL) +5,4 % Casey's General Stores (CASY) -17 % Meta Platforms (META) +5,3 % Tractor Supply (TSCO) -5,5 % Datadog (DDOG) +4,6 % Booking Holdings (BKNG) -4,3 % Dell Technologies (DELL) +4,4 % Vertiv Holdings (VRT) -4,3 % Akamai Technologies (AKAM) +4,3 % Lululemon Athletica (LULU) -4,2 % Zdroj: Bloomberg
Snowflake surged 17% on earnings night, then spent Friday giving it back while every benchmark around it barely budged. That split-screen moment raises a pointed question about who is actually selling and why.
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Snowflake (NYSE:SNOW | SNOW Price Prediction) is handing back part of Wednesday evening’s post-earnings pop, while enterprise software peers and the broader tape barely register a wobble. That gap between a name-specific giveback and a steady sector reads like textbook profit-taking. The Invesco QQQ Trust (NASDAQ:QQQ) is unchanged at $717.67, and the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down 0.4% to $769.89.
Snowflake stock is down 5% to $339.60, cooling off after a one-session surge that lifted shares to a fresh multi-month high on Thursday. Meanwhile, Datadog (NASDAQ:DDOG) stock is unchanged at $214.46 as the observability peer holds its ground through Friday afternoon trading.
Profit-Taking Follows a One-Session Surge The move looks mechanical, not fundamental. Snowflake reported Q2 FY2027 results after the close on September 2, delivering non-GAAP EPS of $0.62 against a $0.447 consensus and revenue of $1.55 billion, up 35.1% year over year (YoY). Product revenue climbed 37% YoY to $1.49 billion, remaining performance obligations reached $9 billion, up 30% YoY, and net revenue retention held at 126%.
Snowflake’s management raised the company’s FY27 product revenue guide to $6.07 billion, or 36% growth, and lifted its non-GAAP operating margin guide to 14.5%. The company added 692 net new customers, up 32% YoY, its Cortex AI suite surpassed 9,100 accounts, and CoWork reached 5,800 accounts. CEO Sridhar Ramaswamy asserted, “Snowflake delivered another strong quarter, with product revenue of $1.49 billion, up 37% year-over-year, as Snowflake continues to power the enterprise AI revolution.” Snowflake stock surged 17% on the release day, and today’s pullback still leaves it up 3% over the past week.
Peer Read Confirms the Setup Datadog is a clean observability comp for a Snowflake move, and its calm trading through the session cuts against any read that enterprise software is being sold as a group. Datadog delivered its own beat on August 6, posting Q2 2026 revenue of $1.12 billion, up 35.6% YoY, and raised its full-year revenue guide to $4.45 billion to $4.47 billion. Non-GAAP operating margin expanded to 23%, and free cash flow reached $278.7 million.
With Datadog roughly flat, QQQ unchanged, and SPY only marginally lower, the Snowflake pullback registers as position unwinding rather than a reassessment of the business. Nothing about Snowflake changed overnight. Guidance held steady, disclosures were routine, and no analyst event of consequence emerged, leaving a large one-session gain to meet the natural supply of holders who had waited for exactly that gain to arrive.
The pattern isn’t new. In Q2 FY2026, Snowflake stock jumped 20% on the day of the report, then slid 6% over the following week. Post-earnings gap-fills are the norm here, and Snowflake’s operational trajectory keeps improving through them.
Session Scorecard Ticker Today Year to Date SNOW down 5% up 55% DDOG unchanged up 57% Both names have run hard in 2026. Snowflake stock is up 55% year to date (YTD), and Datadog stock is up 57% YTD. That backdrop matters. When a name this extended posts a 17% single-session pop on earnings, a giveback the following session is often the price of a crowded book meeting a natural exit. Datadog’s one-month chart tells a different story, with shares down 26% over the past month after a large-customer usage reset that management folded into guidance. Today’s steady tape under Datadog suggests investors have moved past that reset.
What to Watch Next The question price action can’t settle is whether the raised outlook deserved the size of Wednesday’s move. That answer comes with Q3 FY2027 results. Snowflake’s management guided Q3 product revenue to $1.588 billion to $1.593 billion, or 37% to 38% growth. Traders can watch for whether AI adoption keeps pulling core platform consumption higher into that report (the supplier side of that AI buildout, from power to networking, is the subject of a free report we put together here).
Anyone who bought before Snowflake’s report can treat today’s decline as normal digestion. For those who chased the pop, it’s a reminder that liquidity events aren’t information. Investors sizing new exposure to Snowflake stock here should scale their positions carefully given the YTD run and elevated near-term volatility, keeping their allocation modest until the next quarterly cadence validates the raised outlook.
Contact [email protected] for any questions or corrections.
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.
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Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
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Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreWhat if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.
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Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Datadog (DDOG - Free Report) Datadog is a monitoring and analytics platform for developers, IT operations teams and business users in the cloud age. The company's business runs around its portfolio of more than 1,000 out-of-the-box integrations including public cloud, private cloud, on-premise hardware, databases and third-party software.
DDOG is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.
Additionally, the company could be a top pick for growth investors. DDOG has a Growth Style Score of A, forecasting year-over-year earnings growth of 22.9% for the current fiscal year.
12 analysts revised their earnings estimate higher in the last 60 days for fiscal 2026, while the Zacks Consensus Estimate has increased $0.11 to $2.52 per share. DDOG also boasts an average earnings surprise of +15.4%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, DDOG should be on investors' short list.
Datadog Inc. (NASDAQ:DDOG) shares are trading higher Thursday on possible continued momentum after strong earnings from Snowflake Inc. (NYSE:SNOW) on Wednesday.
Datadog shares are climbing with conviction. Why is DDOG stock surging? Snowflake’s Results Drive AI OptimismSnowflake reported a second-quarter double beat, with revenue of $1.55 billion versus estimates of $1.48 billion and adjusted earnings per share of 62 cents versus estimates of 45 cents. Product revenue grew 37% year-over-year, and remaining performance obligations rose 30% year-over-year to $9 billion.
“AI continues to compound our advantages, creating a flywheel effect across the business,” said Sridhar Ramaswamy, CEO of Snowflake.
Snowflake shares soared more than 22% following the report, pulling Datadog higher in sympathy. Datadog offers an AI-powered observability and security platform and often moves alongside Snowflake given the overlap in enterprise AI infrastructure demand.
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DDOG Price Action: At the time of publication, Datadog shares are trading 5.15% higher at $220.00, according to data from Benzinga Pro.
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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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Datadog Inc (NASDAQ:DDOG) shares are rising in Wednesday’s after-hours session following strong earnings from Snowflake Inc (NYSE:SNOW).
Datadog stock is moving higher. Why are DDOG shares rallying? Snowflake’s Strong Results Drive AI Data Cloud OptimismSnowflake on Wednesday reported a double beat for the second quarter, reporting revenue of $1.55 billion versus estimates of $1.48 billion and adjusted earnings per share of 62 cents versus estimates of 45 cents.
The company is benefiting from the enterprise AI revolution with product revenue up 37% year-over-year and remaining performance obligations of $9 billion, up 30% year-over-year.
“AI continues to compound our advantages, creating a flywheel effect across the business,” CEO Sridhar Ramaswamy said.
Snowflake stock soared more than 22% following the report, pulling Datadog up with it. Datadog offers an AI-powered observability and security platform, and often moves in sympathy with Snowflake.
Datadog reported its own second-quarter results last month, beating estimates on the top and bottom lines as AI drove strong demand. The company also raised its full-year guidance on the back of continued AI momentum.
Datadog Shares Pop After HoursDDOG Price Action: Datadog stock was up 4.80% in extended trading Wednesday, trading at $219.27 at the time of publication, according to Benzinga Pro.
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Datadog stands alone in cloud software over the past month, with a company-specific catalyst carving a wide gap between its shares and every close peer.
Key Takeaways Datadog's AI suite is broadening with autonomous tools and security capabilities for agentic workloads.Datadog's $100K ARR customer base rose 23% year over year to roughly 4,720 accounts.Datadog raised 2026 revenue guidance to $4.45-$4.47 billion despite a key customer's usage reduction. Shares of Datadog (DDOG - Free Report) have surged 64.6% year to date, outperforming the broader Zacks Computer and Technology sector's growth of 15.5%, as the AI-powered observability and security platform continues to convert enterprise AI adoption into accelerating revenues.
Yet even after this sharp climb, the investment case for Datadog is not about chasing momentum. It rests on a set of fundamental drivers — expanding large-customer relationships, deepening AI-native product adoption, and a raised full-year outlook — that suggest the stock is best treated as a hold for existing shareholders rather than a fresh buy or a name to exit.
Investors already positioned in DDOG have good reason to stay put, while those still on the sidelines may be better served waiting for a more attractive entry point, given how much of the good news is already reflected in the price.
DDOG Outperforms Industry, Sector YTD
Image Source: Zacks Investment Research
AI Product Momentum Is Broadening the PlatformDatadog advanced its AI roadmap with the general availability of Bits Code, Bits Chat and Bits Agent Builder, extending its Bits AI suite toward fully autonomous incident detection, investigation and remediation. It also introduced AI Guard, a capability built to protect AI agents from prompt injection and data-poisoning attacks, addressing a security gap opening up as enterprises push more agentic workloads into production. Datadog additionally completed its acquisition of Adaptive ML, a frontier AI reinforcement-learning specialist, and was named a Leader in the Gartner Magic Quadrant for Observability Platforms for the sixth consecutive year. Together, these moves reinforce a widening platform rather than a single-product story, supporting the hold thesis even as the stock digests its year-to-date gains.
Customer Growth Remains Broad-Based, Not AI-OnlyDatadog's own disclosures point to genuinely durable demand across its full customer base rather than a narrow, AI-only bump. Management has highlighted that revenue growth among non-AI-native customers also accelerated meaningfully in the most recent quarter, indicating that core cloud-migration and modernization spend remains healthy alongside AI workloads. On the client-win front, the company reported roughly 4,720 customers with annual recurring revenues of $100,000 or more as of quarter-end, up 23% year over year, alongside a record sequential revenue increase of $115 million. That breadth across large accounts and everyday cloud customers reduces reliance on any single buyer cohort.
Raised Guidance Signals Management ConfidenceDatadog's own forward guidance, issued alongside its second-quarter 2026 results on Aug. 6, 2026, offers a more grounded, fundamentals-based read on near-term prospects than the stock chart alone does. For the third quarter of 2026, the company guided revenues to a range of $1.135 billion to $1.145 billion and non-GAAP operating income of $260 million to $270 million. For the full year, management raised its outlook to revenues of $4.45 billion to $4.47 billion, non-GAAP operating income of $1.01 billion to $1.03 billion, and non-GAAP earnings per share of $2.50 to $2.54. Notably, this guidance was raised even after factoring in a usage reduction from the company's largest customer, a sign that demand elsewhere in the customer base is more than offsetting that single account's pullback.
The Zacks Consensus Estimate for DDOG's 2026 earnings currently stands at $2.52 per share, up 4.6% over the past 30 days, compared with earnings of $2.05 per share reported in 2025. That said, the customer-concentration episode is a useful reminder that usage-based revenues can still swing with individual account behavior, a nuance that argues for patience rather than aggressive buying at current price levels.
Valuation and Competitive LandscapeFrom a valuation perspective, DDOG appears overvalued, trading at a forward price-to-sales ratio of 15.73, well above the Zacks Internet – Software industry average of 3.98, and the company carries a Value Score of F.
Datadog competes against a mix of legacy technology giants and specialized observability players, including International Business Machines (IBM - Free Report) , Cisco Systems (CSCO - Free Report) and Dynatrace Software (DT - Free Report) . IBM brings scale and deep enterprise relationships, Cisco leverages its networking footprint, and Dynatrace competes directly on AI-driven automation. Against IBM's and Cisco's broader portfolios and Dynatrace's narrower observability focus, Datadog's platform breadth remains a differentiator, even as IBM, Cisco and Dynatrace intensify AI-native monitoring investment.
Investors may still hold despite the premium valuation because accelerating large-customer growth and raised full-year guidance suggest fundamentals are catching up to the multiple. Holding through the run is reasonable too, since the gains largely reflect improving operating leverage and cash-flow growth rather than sentiment.
DDOG’s Valuation Looks Steep
Image Source: Zacks Investment Research
ConclusionDatadog's fundamentals, broadening AI product adoption, resilient large-customer growth and an upwardly revised full-year outlook paint a picture of a durable, expanding platform rather than a stock riding a temporary wave. At the same time, a stretched valuation, a soft Value Score and lingering customer-concentration risk argue against adding aggressively after such a steep run. For current shareholders, the balance of evidence favors holding and letting the underlying business continue to compound its growth through disciplined execution; for prospective buyers watching from the sidelines, waiting patiently for a calmer, more attractive entry point remains the more prudent near-term path forward. Datadog stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Software is the day’s clearest sore spot at midday, with a handful of the year’s biggest AI-era winners giving back ground even as the broader large-cap technology tape barely moves. That split is the actual story of the session, and…
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Software is the day’s clearest sore spot at midday, with a handful of the year’s biggest AI-era winners giving back ground even as the broader large-cap technology tape barely moves. That split is the actual story of the session, and it explains why several unrelated names are sinking together while the index stays quiet.
The iShares Expanded Tech-Software Sector ETF (NASDAQ:IGV) is down 3% to $103.06, tracking software as a distinct slice of the market. Meanwhile, the Invesco QQQ Trust (NASDAQ:QQQ) is up 0.2% to $709.20, which leaves the NASDAQ 100 slightly higher on the session. That contrast tells the session’s clearest story, since money is leaving software as a group rather than technology as a whole.
Snowflake (NYSE:SNOW | SNOW Price Prediction) stock is down 4% to $306.22 ahead of its fiscal Q2 2027 report scheduled for after today’s close. Meanwhile, Datadog (NASDAQ:DDOG) shares are falling harder, down 6% to $211.29, with no earnings scheduled and no fresh company headline attached to the move. Cloudflare (NYSE:NET) stock is also down 4% to $273.09, rounding out a trio where the deepest cuts are landing on the highest-flying names in the space.
Rotation, Not a Company Catalyst Snowflake is confirmed to report fiscal Q2 2027 results after today’s close, and that scheduled event is real and looming. Yet the pattern across the three tickers does not fit a straightforward earnings-nerves read, because Datadog and Cloudflare are not on the calendar today and are still moving lower in step with Snowflake. If nerves alone were the story, the two non-reporters would be somewhere near the flat line rather than leading the group down.
No fresh company-specific headline explains today’s declines in Datadog or Cloudflare, and the broader software fund is weakening at the same time. The cleaner explanation is a rotation out of high-multiple software rather than a narrative tied to any one ticker, and that framing lines up with what the ETF split is showing on the tape. Snowflake’s late-day report is a coincidence of timing more than a driver of what has already happened this morning.
The software group had rebuilt momentum coming into September after a strong August recovery, and today’s action looks more like traders locking in profits than a change in the AI narrative that has powered the group all year. When the biggest decliners are also the biggest recent winners in a sector, positioning tends to explain more of the day than fundamentals do. That is the read most consistent with today’s ticker-by-ticker picture across Snowflake, Datadog, and Cloudflare.
Where the Selling Is Hitting Hardest Each of the three featured names is dropping further than the software fund itself, which is the fingerprint of the most expensive names in a sector being sold first. Snowflake stock was up 46% year to date (YTD) through Tuesday’s close. Datadog stock was up 65% and Cloudflare stock was up 45% over the same window, giving each of them a thick cushion of prior gains for traders to trim into strength.
Datadog’s leading decline is the most instructive detail in the group today. With no report scheduled and no announcement circulating, the deepest cut is landing on a name with nothing on its own calendar to blame for the move. Traders trimming their exposure to the year’s crowded winners looks like the simpler explanation, and profit taking of this shape typically hits the highest-beta software names before it spreads to steadier corners.
Additionally, the QQQ’s slightly-higher print today underscores that this is not a technology-wide flush. Large-cap tech is holding up while the software sleeve inside it is being sold down, which is what a targeted rotation looks like. That is rotation, not a sector-wide verdict on the AI trade that has driven names like Snowflake, Datadog, and Cloudflare to their current levels.
What to Watch Snowflake’s fiscal Q2 2027 release and its conference call after today’s close is the next scheduled event that can reset sentiment across the group. A clean report may steady IGV and pull the peer trade higher with it, and a softer one can extend today’s move into the next session for Datadog and Cloudflare as well. Either outcome will be measured against a group already in a fragile spot.
Traders can watch for whether IGV holds its recent range into the close, since the sector fund’s behavior is doing more to explain today’s action than any single company inside it. A finish below where the fund started the week would strengthen the rotation read and put more pressure on the peer group heading into the Snowflake report tonight.
Investors weighing their exposure to the highest-multiple software names in IGV may want to lean toward moderate position sizes into tonight’s report and keep dry powder for the reaction. The group’s leaders have already moved sharply against their holders today, and the market shifted quickly enough to justify tighter risk controls on those positions. Snowflake’s report will resolve part of the uncertainty for the software complex, though probably not all of it.
Contact [email protected] for any questions or corrections.
Anyone doubting the importance of cybersecurity to AI, or its strength as a business model, need only look at MarketBeat’s Most Upgraded Stocks. The five most upgraded stocks from the Q2 reporting period were all cybersecurity names. Not five of the most upgraded—the five most upgraded stocks. These companies' services are in demand, and the game is just getting started.
The early phase of AI cybersecurity was underpinned by modelers and model trainers who needed to keep their tech secret yet secure. The phase unfolding today is adoption, and it is by far the larger phase, with cybersecurity companies embedding AI into their offerings and operations, and their clients doing the same.
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The critical takeaway is a chain reaction: AI drives automation, automation is handled by agents, and those agents become cyber identities multiplying across the Internet at an exponential pace. Each needs monitoring—but the bigger imperative is shielding the enterprise data and operations behind them.
For those looking for the single cybersecurity stock to rule them all, there isn’t one. While some have superior coverage in their “comprehensive” packages, none provide 100% complete coverage, and all are intended to be used alongside other tools. This provides numerous growth opportunities in a highly fractured market, but some are clearly favored as the second half of the year matures. Look for these names to move into the upper end of their target ranges, then keep advancing.
Okta: Identity Security Protects Even the Deepest Corporate SecretsOkta’s NASDAQ: OKTA importance lies in how it handles identities. The exponential increase in AI agents means exponentially increased traffic, both internally and from outside sources. Okta’s platform acts as a central control plane, identifying, tokenizing, tracking, monitoring, and enabling or disabling access for agents alongside their human counterparts.
Okta's Q2 results showed significant traction and outperformance, with expectations that strength will continue as agentic traffic increases.
MarketBeat tracks 43 analysts covering Okta, and all made at least one revision over the trailing 90 days leading into Sept. 1, most of which were made after the Q2 release. The current consensus rating is a Moderate Buy with a bullish bias, but the price targets matter most. An eye-popping upswing in price targets drove a 40% increase in the consensus over the last 30 days.
Consensus aligns with the August-ending highs, while the high-end targets forecast a move above $200 and a likely continuation higher as the year progresses.
CrowdStrike’s Falcon Platform Provides Real-Time ControlCrowdStrike NASDAQ: CRWD provides real-time visibility and governance for agentic AI applications. It can detect and respond to threats as they arise, securing endpoints from malicious behavior such as ransomware attacks.
Recent earnings results included sustained 25% year-over-year growth, acceleration from the prior year, and an optimistic outlook. Execs highlighted record and accelerating annual recurring revenue growth, up nearly 55%, expecting further acceleration in upcoming quarters.
MarketBeat tracks 51 analysts with coverage, and 46 issued updates over the trailing 90 days. The trend reflects increased coverage, firming sentiment, a bullish bias, and an uptrend in the price target. Consensus assumes no upside as of late August, but the high end of $425 is where the trend points; that’s about 90% upside.
Datadog Unified Platform Observes, Traces, Secures Agentic AIDatadog NASDAQ: DDOG provides a unified platform for developers and engineers, enabling visibility and security across technology stacks. 2026 results reflected acceleration, outperformance, and sustainability, with guidance above forecasts, though management guided for a slight deceleration in upcoming results.
The critical takeaway is that analysts didn’t mind the guidance too much, as 43 analysts tracked by MarketBeat issued positive revisions for the period, primarily after the Q2 release. They rate the stock as a Moderate Buy, have a bullish bias, and forecast about 18% upside at the consensus. The high end price targets, where the trend leads, adds more than 20%.
Cloudflare: The First Line of Defense, But There’s MoreCloudflare NYSE: NET is an important first line of defense for internet-connected companies, providing proxy services through its global edge network. More importantly, Cloudflare can track incoming and outgoing agentic traffic and monetize it. Agentic AI is changing how the Internet works; websites and publishers need a way to monetize traffic, and Cloudflare provides it.
Its results and analysts' responses mimic the other leading plays, including acceleration, outperformance, and a robust upswing in price targets. The consensus forecasts only moderate upside as of late August; the upper end of price targets, however, adds 25%.
Palo Alto Networks: Comprehensive, But Not Quite Comprehensive EnoughPalo Alto Networks NASDAQ: PANW is a leading cybersecurity play, providing the most complete coverage on the market. However, it is still not a pure play, but may become one as it continues to acquire. Highlights from 2026 include the strength of its platformization strategy, which unifies products into a single access point, and the customer gains and deeper market penetration this strategy is driving.
Analysts rate PANW as a Moderate Buy; coverage and sentiment are firming, and the price target trend is upward. The high end tops out at $475, a 25% upside, but higher highs are likely over time.
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Should You Invest $1,000 in Okta Right Now?Before you consider Okta, you'll want to hear this.
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Analyst’s Disclosure: I/we have a beneficial short position in the shares of DDOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Some of the best opportunities of an investing lifetime arrive disguised as disasters. A frightening headline breaks, the crowd bolts, and a stock sinks under a storm of pessimism. Most investors see only the storm. A few see through it – and the crucial word is see. This isn't about hunting for whatever has fallen furthest and hoping. It's about knowing a business well enough that when the crowd panics, you can tell a broken thesis from one merely being tested. Conviction comes first; the cloud just offers a better price to act on it.
TMF co-founder and Chief Rule Breaker David Gardner has a name for this. In Rule Breaker Investing, he writes: "Detecting competitive advantage where others see vulnerability or weakness sets up the most lucrative investing opportunities. I call these situations 'dark clouds I can see through.'" His image is pure Peanuts: "Picture a storm cloud bursting with lightning and rain directly over Charlie Brown's head."
The catch, he cautions, is real: "You have to show humility in the face of so much confidence on the other side. You may very well be wrong." But when you're right and you hold, skeptics turn into converts and the stock "climbs the proverbial wall of worry." Two recent storms show the idea in action.
CrowdStrike, July 2024When a faulty CrowdStrike (CRWD -4.19%) update crippled millions of Windows machines, the damage looked like it might last for years. The stock, near $85 beforehand, plunged more than a third to $54.50 within weeks. (Those 2024 figures are split-adjusted; CrowdStrike executed its first-ever stock split, 4-for-1, on July 1, 2026.)
In our Rule Breakers service, we put it in the Penalty Box – but we did not sell. We moved it to Hold, watched two quarters of growing customers and deepening usage, and moved it to buy again that December, by which point it had already passed its pre-outage price. The cloud was real but temporary: CrowdStrike has since nearly quadrupled off that low, touching $216 this month.
The SaaSpocalypse of 2026The bigger, darker cloud came this year. Software had spent two decades selling by the seat: 500 employees meant 500 licenses, billed monthly like clockwork. Then artificial intelligence (AI) agents started doing work that used to require a human with a login – and if the work no longer needs the human, the reasoning went, it no longer needs the seat.
Investors decided the model was breaking and named the panic the "SaaSpocalypse." Software fell below the S&P 500 for the first time ever, and the software exchange-traded fund (ETF) logged its worst quarter since 2008.
We saw a dark cloud we could see through. Agents can't route around software that sits on a control point – to do anything useful, an agent must read and write the records and permissions living inside those platforms – and ripping out a system of record means rewiring workflows and reproving compliance, so customers stay put.
The fear also confused how software gets paid with whether it gets paid; the best platforms were already shifting toward charging for what agents actually do. In cybersecurity, the fear was backward entirely: Every new AI agent is one more identity to verify and one more door to guard, which means more security spending, not less.
So, rather than sell into the panic, Team Rule Breakers held its software leaders – names like Salesforce (CRM +1.57%), Datadog (DDOG -2.45%), and Palo Alto Networks (PANW -2.94%) – and, most tellingly, recommended Veeva Systems (VEEV -1.93%) as a fresh buy right into the storm on April 21 at $167.79.
This was not a stock we met in the wreckage: Veeva had been a Rule Breakers recommendation since 2014, studied for over a decade before the cloud rolled in. That's what made the call possible. For members already holding, April was a chance to add to a winner at a discount; for everyone else, an invitation into a business we'd long understood, at a price the panic handed us.
By mid-2026, the clouds had thinned. Earnings proved the theses intact: The most defensible software names comfortably outran the recovering software ETF, security leaders beat estimates and raised guidance as demand rose, and Salesforce's AI-agent product alone reached $1.2 billion in recurring revenue. Veeva trades near $248 today, up roughly 48% from that April recommendation (and beating the market by nearly 39% to boot).
None of this felt obvious at the time. That's the point. Dark clouds never feel comfortable; they feel like everyone else knows something you don't. Sometimes they do – which is why the work has to come before the storm, not during it. But when you already know why a company wins, and your research says the hurdle is temporary, these are the moments that build Rule Breaker fortunes.
Key Takeaways Datadog saw 58% of customers use at least four products, while 37% used six or more as of June 2026.A major online media company signed a multiyear Datadog deal worth more than $30 million in contract value.Datadog's Real User Monitoring topped $200 million in ARR and grew more than 50% year over year. Datadog’s (DDOG - Free Report) multi-product strategy is gaining traction; a growing number of customers are adopting its additional products, thereby creating further opportunities to increase revenues from existing customers. As of June 30, 2026, 58% of customers used at least four Datadog products, up from 52% a year earlier, while the share using six or more rose to 37% from 29%; those using 10 or more nearly doubled to 13% from 7%. Datadog's land-and-expand model supports this expansion, as management notes that the company typically lands customers with two or more products and then expands from there.
The strategy is also translating into larger customer relationships. A South American bank consolidated onto 11 Datadog products and is adding security offerings, while a Fortune 100 health insurer is expanding to 19 products. A major online media company signed a multiyear deal worth more than $30 million in total contract value after standardizing on Datadog and adopting products beyond core observability, including Product Analytics, CI Visibility, Data Observability and Cloud Cost Management.
Datadog's expanding product footprint is creating more opportunities to deepen existing customer relationships. RUM, or Real User Monitoring, surpassed $200 million in ARR and grew more than 50% year over year, with customers increasingly using it alongside Product Analytics. Together, rising multi-product adoption, larger platform deployments and growth in newer offerings could help Datadog generate more revenues from its existing customer base.
The Zacks Consensus Estimate projects year-over-year total revenue growth of 28.9% in 2026, highlighting the company's growth potential.
DDOG Faces Stiff Competition From Dynatrace & CiscoDynatrace (DT - Free Report) and Cisco (CSCO - Free Report) are broadening their unified platforms to encourage tool consolidation and deeper customer adoption, intensifying competition for the same expansion opportunities underpinning DDOG’s multi-product strategy.
Dynatrace is competing with DDOG through an end-to-end observability platform designed to drive broader adoption and consolidation. DT says customers often expand quickly, with significant cross-sell and upsell opportunities, while log-management growth and AI observability create additional consumption. DT’s 110% NRR reinforces the expansion opportunity.
Cisco challenges DDOG through a broader technology portfolio spanning networking, security and observability. CSCO says more than half of customers buy both campus and data-center networking, while Splunk integration is generating whole-portfolio agreements. Cisco’s unified cloud control further strengthens cross-product adoption by providing a single management plane across various products.
DDOG’s Share Price Performance, Valuation & EstimatesShares of DDOG have surged 66.1% year to date, outperforming the broader Zacks Computer and Technology sector's growth of 15.7%.
DDOG’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation perspective, DDOG appears overvalued, trading at a forward price-to-sales ratio of 15.93, significantly higher than the Internet – Software industry average of 3.93. The company carries a Value Score of F.
DDOG’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDOG’s 2026 earnings is currently pegged at $2.52 per share, an increase of 4.6% over the past 30 days. The company reported earnings of $2.05 per share in 2025.
Image Source: Zacks Investment Research
Datadog stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways Datadog emerges as the stronger pick, backed by faster revenue and earnings growth and rising estimates.DDOG's second-quarter revenues jumped 36% to $1.12B, while free cash flow reached $279 million.ServiceNow's subscription revenues rose 24.5% to $3.88B, while cRPO increased 21% to $13.2B. Datadog (DDOG - Free Report) is a cloud-based observability and security platform that helps organizations monitor applications, infrastructure, logs and AI workloads. ServiceNow (NOW - Free Report) provides an enterprise AI platform that connects data, workflows, IT service management, security and automation across business functions.
Both companies sit at the heart of modern cloud operations, helping enterprises manage the growing complexity of technology and automate critical workflows. The comparison is sensible as AI adoption accelerates demand for observability, incident response and intelligent automation. As both companies maintain strong growth momentum, DDOG and NOW provide an interesting comparison for investors evaluating which cloud software stock offers the better opportunity. Let’s take a closer look.
The Case for DDOG StockDatadog presents an attractive cloud software opportunity as rising cloud and AI complexity increases demand for unified observability, security and workflow automation. Its SaaS platform integrates infrastructure monitoring, application performance, logs, user experience, cloud security and service management, helping organizations manage increasingly complex technology environments, improve collaboration across teams, accelerate problem resolution and expand automation. This broad platform approach gives Datadog multiple avenues to increase adoption within existing accounts.
Second-quarter 2026 results reinforced this thesis as revenues jumped 36% year over year to $1.12 billion, free cash flow reached $279 million and $100K-plus ARR customers rose 23% to about 4,720. Trailing net revenue retention remained in the low 120s, while 58% of customers used at least four products, supporting a strong land-and-expand model.
Datadog serves about 33,400 organizations, ranging from startups to large enterprises; more than 750 AI customers use its platform, including all 10 of the top AI leaders. This broad customer footprint gives Datadog exposure to both established enterprises and fast-growing AI workloads, while rising AI adoption could create additional demand for monitoring, security and management tools.
Growth opportunities are expanding through AI-powered Bits Code, Bits Chat, Bits Agent Builder, AI Guard and autonomous incident remediation. The Adaptive ML acquisition adds reinforcement-learning expertise that could strengthen specialized agents and world-model research. Since July, Datadog has also advanced Cloud Cost workflows and Work Management, while its August AI-native SAST release broadens protection for LLM applications.
Nevertheless, investors should consider the significant risks alongside these opportunities. Competition remains intense, while rapid technological change, cybersecurity threats, service interruptions and weaker IT spending could pressure growth. Datadog has also indicated that usage by its largest customer will decrease starting in the third quarter of 2026; this highlights the sensitivity of its usage-based model to changes in customer workloads.
The Case for NOW StockServiceNow remains a leading cloud-based enterprise software platform helping large organizations manage technology complexity, automate workflows and connect data, AI and security. Its investment case rests on whether it can turn this broad enterprise footprint into a larger opportunity in AI, cybersecurity and workflow automation.
However, investors should weigh several concerns first. In the second quarter of 2026, GAAP operating margin fell to 4% from 11% a year earlier, while GAAP gross margin declined to 70.5% from 77.5%, both contracted 700 basis points year over year, partly reflecting acquisition-related amortization and costs. Stock-based compensation alone represented 16.5% of revenues.
The balance sheet also carries more financial obligations following the Armis acquisition. ServiceNow had $2.1 billion of commercial paper outstanding at the end of June, while it issued $4 billion of senior unsecured notes in May to refinance acquisition-related borrowing.
The company is facing intense competition, including pricing pressure from vendors like Salesforce, while many enterprises are still struggling to prove AI returns after investing in small-scale AI trials. A U.S. federal channel partner and systems integrator accounted for 13% of second quarter 2026 revenues, highlighting some customer-concentration risk.
However, ServiceNow's underlying demand remains strong. In the second quarter of 2026, subscription revenues rose 24.5% year over year to $3.88 billion, while cRPO increased 21% to $13.2 billion. The company also recorded 123 transactions exceeding $1 million in net new ACV, up nearly 40% year over year, suggesting continued strength in large enterprise deals.
ServiceNow AI surpassed $1 billion in ACV, agentic AI deployments increased ninefold in nine months, and 658 customers had more than $5 million in ACV. This indicates that AI is beginning to translate from an emerging product opportunity into a meaningful commercial growth driver. Its above 8,800 customers include roughly 90% of the Fortune 500, giving ServiceNow a substantial installed base from which to cross-sell AI, security, CRM and other workflows.
Share Price Performance for DDOG & NOWYear to date (YTD), DDOG shares have surged 66%, immensely outperforming NOW’s 16.4% decline. Datadog's rally is supported by its faster revenue growth, expanding AI opportunity, deeper enterprise penetration and broader platform adoption.
YTD Stock Performance
Image Source: Zacks Investment Research
Valuation ComparisonBoth DDOG and NOW stocks are currently overvalued, as suggested by the Value Score F and D, respectively.
While DDOG trades at a higher forward 12-month P/S multiple of 15.93X versus 7.3X for NOW, its stretched valuation is supported by faster growth, expanding AI opportunities and deeper platform adoption. Therefore, DDOG’s valuation leaves less room for execution disappointments, but its stronger growth profile could help justify the premium if momentum is sustained.
Forward 12-Month (P/S) Valuation
Image Source: Zacks Investment Research
DDOG vs. NOW: Which Has the Stronger Growth Estimates?The Zacks Consensus Estimate for DDOG’s 2026 earnings is currently pegged at $2.52 per share, implying approximately 23% year-over-year growth. More importantly, earnings estimates have trended higher over the past 30 and 60 days, suggesting improving analyst sentiment and potentially stronger expectations.
Image Source: Zacks Investment Research
By comparison, the Zacks Consensus Estimate for NOW’s 2026 earnings stands at $4.07 per share, implying 15.6% year-over-year growth. However, estimates have trended lower over the past 30 and 60 days, suggesting relatively softer expectations for ServiceNow’s earnings growth.
Image Source: Zacks Investment Research
Earnings-surprise trends further strengthen DDOG’s case. Both companies have beaten the Zacks Consensus Estimate in each of the past four quarters. However, DDOG’s average earnings surprise of 15.4% significantly exceeds NOW’s 6.8%, indicating that Datadog has demonstrated greater consistency in outperforming analyst expectations.
ConclusionDDOG emerges as the stronger pick over NOW, backed by faster revenue and earnings growth, stronger earnings surprises, rising estimates and expanding AI opportunities. Although its premium valuation raises risk, Datadog’s accelerating platform adoption, resilient customer expansion, and exposure to growing AI workloads provide a more favorable growth profile, giving DDOG an edge.
Currently, DDOG carries a Zacks Rank #3 (Hold), while NOW has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chief Executive Officer Olivier Pomel net sold 47,054 shares of Datadog, Inc. (DDOG -4.18%) on Aug. 19, 2026, as disclosed in a recent SEC Form 4 filing.
Transaction summaryMetricValueShares sold47,054Transaction value$11.1 millionPost-transaction shares (directly held)612,747Post-transaction value$143.09 millionTransaction value based on SEC Form 4 weighted average sale price ($235.49); post-transaction value based on Aug. 19, 2026, market close ($233.52).
Key questionsWhat was the regulatory context for this sale?
The transaction was executed pursuant to a Rule 10b5-1 trading plan adopted on Dec. 15, 2025, a mechanism that allows company insiders to sell shares according to a predetermined schedule to manage personal liquidity while complying with insider trading laws.How does this disposal relate to the insider's total equity position?
Following this transaction, Olivier Pomel maintains direct ownership of 612,747 shares of Class A Common Stock and continues to hold approximately 8.7 million derivative securities, including vested and unvested awards.What was the underlying mechanism for the share disposition?
This event involved the exercise of 47,054 options that were immediately sold in the open market, resulting in a net disposition of the underlying Class A Common Stock.How has the stock performed leading up to this transaction?
The shares were sold at $235.49 per share, as the company has delivered an 81% total return over the 12 months ending on Aug. 19, 2026, the transaction date.Company OverviewMetricValueShare Price (as of market close 2026-08-20)$232.55Market Capitalization$83.5 billionRevenue (TTM)$4.0 billionNet Income (TTM)$177.6 millionCompany SnapshotDatadog provides a comprehensive cloud-based monitoring and analytics platform that combines infrastructure oversight, application performance tracking, log management, and security surveillance into an integrated Software-as-a-Service offering.The company operates on a SaaS subscription model, generating revenue from customers who pay recurring fees for access to its monitoring and analytics capabilities across their technology infrastructure.Datadog serves developers, IT operations personnel, and business stakeholders across North America and internationally, addressing the needs of organizations requiring real-time visibility into their cloud and hybrid environments.Datadog is a leading cloud-based observability platform with $4.0 billion in TTM revenue and an $83.5 billion market capitalization, reflecting strong investor confidence in its growth trajectory. The company has demonstrated significant momentum, with its stock appreciating 81.04% over the past year, driven by increasing enterprise adoption of its integrated monitoring and analytics suite. Datadog's competitive advantage lies in its ability to consolidate multiple critical operational functions -- infrastructure monitoring, application performance management, log analytics, and security -- into a unified platform that delivers comprehensive end-to-end visibility for modern cloud-native organizations.
What this transaction means for investorsOlivier Pomel conducted his insider sale of Datadog shares in a way that should calm investors rather than alarm them.
His sale was a pre-planned transaction under the Rule 10b5-1 framework. Since this was put in place back in December, it should fulfill the rule's intent to avoid the appearance of acting on insider information. Also, since Olivier sold only 7% of his shares, the sale does not indicate a loss of confidence in his company.
Olivier also benefited from a huge surge in the SaaS stock, as it is up more than 80% over the last year. This is critical, as software stocks have suffered from a so-called "SaaSpocalypse," in which AI would allegedly render them obsolete.
Today's Change
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Fortunately, AI appears to have become an asset for Datadog rather than a liability, as it has driven demand and, by extension, new revenue streams for the company. Thus, Datadog investors should probably watch AI more closely than they do pre-planned stock sales by insiders.
Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Datadog. The Motley Fool has a disclosure policy.
Datadog stock is trading at a very high price-to-sales ratio of 22.7, so it's far more expensive than the broader market. Datadog's quarterly revenue growth is accelerating, which might explain why some investors are willing to pay a premium for its stock.
On August 19, 2026, Datadog Inc (DDOG) shares experienced a decline of 5.1%, bringing the current price to $233.52. This price is situated within a 52-week rang
Analyst’s Disclosure: I/we have a beneficial long position in the shares of PLTR, CRM either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Key Takeaways Datadog's $100,000-plus ARR customers rose 23% to about 4,720, contributing 91% of total ARR.Enterprise new-logo bookings more than doubled, while new customers drove about 30% of Q2 revenue growth.Datadog expects Q3 2026 revenues of $1.135-$1.145 billion as customers expand platform usage. Datadog (DDOG - Free Report) is seeing strong growth in its large customer base, with customers generating at least $100,000 in ARR rising 23% year over year to approximately 4,720 as of June 30, 2026. These accounts contributed about 91% of total ARR, up from 89% a year earlier, strengthening the company’s high-value recurring revenue base.
Datadog is also gaining momentum in enterprise sales. New-logo annualized bookings in the enterprise segment more than doubled year over year, while new customers contributed about 30% of year-over-year revenue growth in the second quarter. The company’s AI customer base is also becoming more valuable, with more than 750 AI customers, including 31 spending over $1 million annually and eight spending over $10 million annually.
Importantly, large customers are expanding their use of the platform. A Fortune 100 insurer is expected to use 19 Datadog products, while a major online media company signed a multiyear deal worth more than $30 million in TCV. Datadog’s low-120% net revenue retention also reflects continued expansion from existing customers.
Looking ahead, Datadog expects third-quarter 2026 revenues of $1.135-$1.145 billion, suggesting continued momentum following the strong second-quarter performance. The outlook provides further support for the company’s growth trajectory as its large customer base expands and existing customers increase platform usage.
Taking a Look at DDOG’s CompetitorsThe customer base remains a key battleground in observability, with Datadog, Dynatrace and Elastic pursuing different strategies to attract, retain and expand enterprise customers.
Dynatrace (DT - Free Report) competes with Datadog’s broader 33,400-customer base through an enterprise-focused strategy, adding 122 new logos and achieving more than 160% new-logo ARR growth. Dynatrace’s unified AI-powered observability, open interoperability and platform-consolidation approach support larger customer lands, while average ARR per customer exceeds $500,000. Dynatrace’s mid-90s gross retention and 110% NRR strengthen expansion opportunities.
Elastic’s (ESTC - Free Report) growing base of high-value customers strengthens its competitive position against Datadog, with more than 1,720 customers exceeding $100,000 ACV and over 240 above $1 million. Elastic emphasizes multiyear commitments without material changes in discount practices, while AI, search, security and observability broaden its opportunity. The company’s data gravity, context platform and specialized agents support consolidation, helping Elastic deepen customer relationships.
DDOG’s Share Price Performance, Valuation & EstimatesShares of DDOG have surged 77.2% year to date, outperforming the broader Zacks Computer and Technology sector's growth of 18.3%.
DDOG’s YTD Price Performance
Image Source: Zacks Investment Research
Datadog trades at a premium with a Price-to-Book (P/B) ratio of 19.64 compared to the broader Zacks Internet – Software industry's multiple of 5.01. DDOG carries a Value Score of F.
DDOG’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDOG’s 2026 earnings is currently pegged at $2.43 per share, increased by 2 cents over the past 30 days. The company reported earnings of $2.05 per share in 2025.
Image Source: Zacks Investment Research
Datadog stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3 of the Market's Most-Upgraded Tech Stocks Right NowDatadog NASDAQ: DDOG Chief Financial Officer David Obstler said the company’s recent growth has been supported by a broader product platform, market-share gains and expanding demand across customer sizes and geographies. In a conference discussion with Canaccord Genuity technology analyst Kingsley Crane, Obstler said the company has benefited from customers modernizing technology stacks and preparing infrastructure for artificial intelligence workloads.
Crane characterized Datadog’s latest quarter as featuring 36% growth at a $1.1 billion scale, accelerating from 32%, and noted that growth had accelerated over the past five quarters. Obstler said the results reflected investments in the platform that have expanded the product portfolio and enabled greater cross-selling.
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Datadog’s Drop Says More About Expectations Than Earnings“We’re seeing strength across all the way from SMB to enterprise and globally,” Obstler said. “Anytime we have a re-platforming and a modernization of tech stack, that’s complemented Datadog in their growth.”
Platform adoption and customer expansion Obstler said growth has not been limited to AI-native companies. He said enterprise customers have accelerated adoption of the Datadog platform, driven by demand for integrated, real-time observability and security capabilities.
5 Tech Stocks Holding Their Ground Through the AI Trade PullbackHe pointed to what he described as substantial market-share gains, saying Datadog added $115 million in revenue sequentially during the last quarter. The company’s platform approach appeals to customers seeking a “single pane of glass” for monitoring and security, he said.
Datadog’s customer expansion model generally unfolds over multiple years, according to Obstler. Customers often initially use other vendors, then add Datadog products as existing contracts come up for renewal. The company sells capacity through a credit-based model, allowing customers to use different products on the platform.
Obstler said cohorts signed five years ago are continuing to expand, supported by product additions and vendor consolidation. He cited net retention in the low 120% range as evidence of the durability of that expansion motion.
Customers increasingly adopt more Datadog products over time, rather than switching all tools at once. Modern and mission-critical workloads have increasingly been directed to Datadog for monitoring, Obstler said. Datadog works with customers on capacity planning under contracts that generally span at least one year and can extend to three years. AI-native customers and production workloads Obstler said AI-native companies represent a smaller percentage of Datadog’s annual recurring revenue than cloud-native customers did during the COVID-era technology boom, but the group is growing quickly. He said Datadog had more than 750 AI-native customers, with more than 30 generating at least $1 million in annual recurring revenue.
Those companies include model providers, database providers, GPU providers and companies serving specific industry verticals, he said. While Obstler acknowledged that AI-native markets could be volatile, he described the segment as an endorsement of Datadog’s position in modern technology infrastructure.
He said AI-related monitoring demand is increasingly shifting from training and research into production environments. Datadog is positioned to monitor applications using large language models, agents, coding agents and GPU infrastructure, he said. The company is also beginning to address more training-related use cases.
“We basically set that up, and we’ve been seeing very good growth in that area,” Obstler said of AI monitoring. He added that Datadog monetizes these offerings through usage-based pricing tied to data consumed, investigations and related activity.
Bits AI and product investment Obstler also discussed “AI for Datadog,” referring to the company’s use of AI within its own platform. He said the Bits AI product is designed to help users automate investigations, analyze issues, route cases and eventually support more self-remediation.
The company has broadened Bits AI beyond reliability engineering investigations into development and security use cases, Obstler said. Datadog has tested pricing approaches, moving from a per-investigation model toward token-based pricing in some areas.
Datadog’s data sets, platform integration and existing use of machine learning for analytics provide an advantage in observability-specific AI, Obstler said. He said the company’s vision is to provide specialized intelligence that can identify problems and, in certain instances, enable customers to approve automated remediation.
Obstler said Datadog plans to continue investing in both sales capacity and research and development. Sales capacity has expanded globally at roughly the same pace as revenue, he said. While the company expects a greater share of R&D resources to shift toward tokens and AI tools over time, he said management is focused on using those tools to develop products rather than pursuing AI investment at the expense of margins.
Competitive strategy Addressing competition from companies expanding their own platforms, including security and data-focused vendors, Obstler said Datadog remains focused on observing software in production and on adjacent opportunities where its observability platform creates synergies.
He cited cloud workload security, Cloud SIEM and service management as areas where Datadog can expand, while emphasizing that the company is not attempting to address every segment of the broader security market. Obstler said Datadog’s focus on modern cloud workloads, coupled with continued R&D investment, has strengthened rather than weakened its competitive position.
About Datadog (NASDAQ:DDOG)Datadog NASDAQ: DDOG is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog's platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.
The company's product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.
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Datadog, Inc. (DDOG) Canaccord Genuity's 46th Annual Growth Conference August 12, 2026 3:30 PM EDT
Company Participants
David Obstler - Chief Financial Officer
Conference Call Participants
William Kingsley Crane - Canaccord Genuity Corp., Research Division
Presentation
William Kingsley Crane
Canaccord Genuity Corp., Research Division
Hi, everyone. Thanks for joining this -- one of the last sessions at this conference, probably the last thing between you and Smith & Wollensky, so we'll try to make it interesting. I'm Kingsley Crane, technology analyst here at Canaccord Genuity. We're really excited to have Datadog with us here today. David Obstler is CFO. David, thanks so much.
David Obstler
Chief Financial Officer
Thanks for having us. I hope it's a meaty discussion before Smith & Wollensky.
Question-and-Answer Session
William Kingsley Crane
Canaccord Genuity Corp., Research Division
So let's kick it off. For those of you that aren't familiar, let's start with the quarter. 36% growth, $1.1 billion of scale, accelerating from 32%. You've accelerated the past 5 quarters. Just what were your takeaways from the quarter? And is there any simple way to describe what's going so well right now for the company?
David Obstler
Chief Financial Officer
Yes. It's really a combination of our investment in the platform, which has expanded the product line. That's enabled us to cross-sell and also take market share. We're seeing strength across all the way from SMB to enterprise and globally. And in order to distribute that, we've also successfully expanded our go-to-market. And then the environment is pretty good where we have the AI natives, but in the overall customer base, there's a strong investment in platform right now partially to take advantage of what's coming with AI. And that any time we have a replatforming and a modernization of tech stack, that's complemented Datadog and their growth. So all of that came together, and it's been compounding over
Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Datadog (DDOG - Free Report) .
Datadog currently has an average brokerage recommendation (ABR) of 1.30, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 44 brokerage firms. An ABR of 1.30 approximates between Strong Buy and Buy.
Of the 44 recommendations that derive the current ABR, 37 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 84.1% and 6.8% of all recommendations.
Brokerage Recommendation Trends for DDOG
Check price target & stock forecast for Datadog here>>>
While the ABR calls for buying Datadog, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABRAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Is DDOG Worth Investing In?In terms of earnings estimate revisions for Datadog, the Zacks Consensus Estimate for the current year has increased 2.2% over the past month to $2.43.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Datadog. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Datadog may serve as a useful guide for investors.
Datadog, Inc. (NASDAQ:DDOG – Get Free Report) Director Amit Agarwal sold 20,000 shares of the company’s stock in a transaction on Thursday, August 6th. The shares were sold at an average price of $234.85, for a total value of $4,697,000.00. Following the completion of the transaction, the director owned 1,640 shares of the company’s stock, valued at $385,154. The trade was a 92.42% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan.
Amit Agarwal also recently made the following trade(s):
On Thursday, July 30th, Amit Agarwal sold 20,000 shares of Datadog stock. The stock was sold at an average price of $266.82, for a total value of $5,336,400.00. On Thursday, July 23rd, Amit Agarwal sold 20,000 shares of Datadog stock. The stock was sold at an average price of $244.87, for a total transaction of $4,897,400.00. On Thursday, July 9th, Amit Agarwal sold 20,000 shares of Datadog stock. The shares were sold at an average price of $267.41, for a total transaction of $5,348,200.00. On Thursday, July 2nd, Amit Agarwal sold 20,000 shares of Datadog stock. The shares were sold at an average price of $261.22, for a total transaction of $5,224,400.00. On Thursday, June 25th, Amit Agarwal sold 20,000 shares of Datadog stock. The shares were sold at an average price of $220.12, for a total transaction of $4,402,400.00. On Thursday, June 18th, Amit Agarwal sold 20,000 shares of Datadog stock. The stock was sold at an average price of $220.92, for a total transaction of $4,418,400.00. On Friday, June 12th, Amit Agarwal sold 20,000 shares of Datadog stock. The stock was sold at an average price of $231.56, for a total transaction of $4,631,200.00. Datadog Price Performance Shares of Datadog stock opened at $260.78 on Tuesday. The firm has a market cap of $92.83 billion, a P/E ratio of 532.21, a price-to-earnings-growth ratio of 23.28 and a beta of 1.54. The firm’s 50-day simple moving average is $248.96 and its 200-day simple moving average is $179.27. Datadog, Inc. has a twelve month low of $98.01 and a twelve month high of $292.72. The company has a debt-to-equity ratio of 0.23, a quick ratio of 3.20 and a current ratio of 3.20.
Datadog (NASDAQ:DDOG – Get Free Report) last posted its quarterly earnings results on Thursday, August 6th. The company reported $0.65 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.58 by $0.07. The firm had revenue of $1.12 billion during the quarter, compared to analyst estimates of $1.08 billion. Datadog had a net margin of 4.48% and a return on equity of 5.67%. The company’s quarterly revenue was up 35.6% compared to the same quarter last year. During the same quarter in the prior year, the business posted $0.46 earnings per share. Datadog has set its Q3 2026 guidance at 0.630-0.650 EPS and its FY 2026 guidance at 2.500-2.540 EPS. As a group, research analysts expect that Datadog, Inc. will post 0.66 EPS for the current fiscal year.
Hedge Funds Weigh In On Datadog A number of institutional investors and hedge funds have recently bought and sold shares of the business. Monetta Financial Services Inc. bought a new stake in shares of Datadog during the second quarter worth $2,734,000. Commerzbank Aktiengesellschaft FI bought a new position in shares of Datadog in the second quarter valued at about $451,000. Plato Investment Management Ltd bought a new position in shares of Datadog in the second quarter valued at about $1,313,000. Regent Peak Wealth Advisors LLC acquired a new position in Datadog during the 2nd quarter worth about $206,000. Finally, Tema ETFs LLC lifted its position in Datadog by 8.1% during the 2nd quarter. Tema ETFs LLC now owns 5,792 shares of the company’s stock worth $1,508,000 after buying an additional 435 shares in the last quarter. Institutional investors and hedge funds own 78.29% of the company’s stock.
Key Headlines Impacting Datadog Here are the key news stories impacting Datadog this week:
Positive Sentiment: Datadog’s second-quarter results exceeded expectations: revenue rose 35.6% year over year to $1.12 billion, non-GAAP EPS reached $0.65, and next-quarter revenue guidance of approximately $1.14 billion was above consensus. The company also cited accelerating core growth and AI momentum. DDOG Q2 Deep Dive: Market Reacts Negatively Despite Accelerating Core Growth and AI Momentum Positive Sentiment: Analyst support is helping sentiment. DA Davidson reiterated a “Buy” rating, while another report said Datadog’s price target was raised to $305, suggesting continued confidence in its growth outlook. Datadog’s Buy Rating Reiterated at DA Davidson Datadog Price Target Raised to $305 Positive Sentiment: AI-related demand, strong cash flow, net revenue retention above 120%, and Datadog’s Bits AI platform continue to support the long-term growth thesis. The company also expanded its platform to the AWS Europe (London) Region, improving data-locality options for U.K. customers. Datadog: Best Of Breed For Multiple Reasons Datadog Grows Fast, Then Gets Punished For Slowing Down Neutral Sentiment: Datadog is being described as one of the market’s most-upgraded technology stocks. However, the stock’s sharp reaction after earnings highlights how demanding expectations have become. Three of the Market’s Most-Upgraded Tech Stocks Negative Sentiment: At a very high earnings multiple, Datadog remains vulnerable to further selling if revenue growth moderates. Analysts note that the company delivered strong results but was previously punished because growth failed to exceed elevated expectations. Is DDOG Stock Worth Investing In After Q2 Beat and Solid 2026 Guidance? Negative Sentiment: Director Amit Agarwal sold 20,000 shares under a pre-arranged Rule 10b5-1 plan, substantially reducing his direct holdings. The scheduled nature of the transaction limits its signaling value, but insider selling can weigh modestly on sentiment. SEC Insider Transaction Filing Wall Street Analyst Weigh In DDOG has been the topic of several recent analyst reports. Evercore boosted their price target on Datadog from $225.00 to $265.00 and gave the company an “outperform” rating in a research note on Wednesday, June 10th. Wall Street Zen upgraded Datadog from a “hold” rating to a “buy” rating in a research note on Saturday, May 16th. Cantor Fitzgerald lifted their price objective on Datadog from $226.00 to $327.00 and gave the company an “overweight” rating in a report on Monday, August 3rd. Wedbush began coverage on shares of Datadog in a research note on Monday, June 15th. They issued a “neutral” rating on the stock. Finally, Jefferies Financial Group set a $260.00 target price on shares of Datadog in a report on Thursday. Two investment analysts have rated the stock with a Strong Buy rating, thirty-eight have issued a Buy rating, three have issued a Hold rating and two have given a Sell rating to the company’s stock. According to MarketBeat.com, the company has a consensus rating of “Moderate Buy” and an average price target of $276.32.
Check Out Our Latest Stock Report on Datadog
About Datadog (Get Free Report)
Datadog (NASDAQ: DDOG) is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog’s platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.
The company’s product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.
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Datadog, Inc. (NASDAQ:DDOG – Get Free Report) shares were up 7% during trading on Monday after Citigroup raised their price target on the stock from $300.00 to $305.00. Citigroup currently has a buy rating on the stock. Datadog traded as high as $250.00 and last traded at $250.3330. 1,386,945 shares changed hands during mid-day trading, a decline of 75% from the average daily volume of 5,644,125 shares. The stock had previously closed at $233.93.
A number of other research analysts also recently issued reports on DDOG. Barclays boosted their price target on Datadog from $260.00 to $290.00 and gave the company an “overweight” rating in a report on Tuesday, July 21st. Truist Financial raised shares of Datadog from a “hold” rating to a “buy” rating and lifted their target price for the company from $190.00 to $300.00 in a report on Monday, June 15th. Bank of America boosted their target price on shares of Datadog from $260.00 to $280.00 and gave the company a “buy” rating in a research note on Monday, June 8th. Mizuho increased their price target on shares of Datadog from $220.00 to $300.00 and gave the stock an “outperform” rating in a report on Wednesday, July 15th. Finally, Capital One Financial raised their price target on shares of Datadog from $217.00 to $268.00 and gave the company an “overweight” rating in a research report on Wednesday, June 17th. Two research analysts have rated the stock with a Strong Buy rating, thirty-eight have assigned a Buy rating, three have given a Hold rating and two have issued a Sell rating to the company’s stock. Based on data from MarketBeat, Datadog presently has an average rating of “Moderate Buy” and an average target price of $276.32.
Check Out Our Latest Stock Analysis on Datadog
Insiders Place Their Bets In other news, Director Amit Agarwal sold 20,000 shares of the company’s stock in a transaction that occurred on Thursday, August 6th. The stock was sold at an average price of $234.85, for a total transaction of $4,697,000.00. Following the completion of the transaction, the director directly owned 1,640 shares of the company’s stock, valued at $385,154. This represents a 92.42% decrease in their position. The sale was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Olivier Pomel sold 127,141 shares of the stock in a transaction that occurred on Wednesday, August 5th. The shares were sold at an average price of $286.71, for a total value of $36,452,596.11. Following the transaction, the chief executive officer owned 612,747 shares in the company, valued at $175,680,692.37. This trade represents a 17.18% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold a total of 1,375,022 shares of company stock valued at $338,768,384 in the last three months. 6.48% of the stock is currently owned by company insiders.
Datadog News Roundup Here are the key news stories impacting Datadog this week:
Positive Sentiment: Datadog’s second-quarter results exceeded expectations: revenue rose 35.6% year over year to $1.12 billion, non-GAAP EPS reached $0.65, and next-quarter revenue guidance of approximately $1.14 billion was above consensus. The company also cited accelerating core growth and AI momentum. DDOG Q2 Deep Dive: Market Reacts Negatively Despite Accelerating Core Growth and AI Momentum Positive Sentiment: Analyst support is helping sentiment. DA Davidson reiterated a “Buy” rating, while another report said Datadog’s price target was raised to $305, suggesting continued confidence in its growth outlook. Datadog’s Buy Rating Reiterated at DA Davidson Datadog Price Target Raised to $305 Positive Sentiment: AI-related demand, strong cash flow, net revenue retention above 120%, and Datadog’s Bits AI platform continue to support the long-term growth thesis. The company also expanded its platform to the AWS Europe (London) Region, improving data-locality options for U.K. customers. Datadog: Best Of Breed For Multiple Reasons Datadog Grows Fast, Then Gets Punished For Slowing Down Neutral Sentiment: Datadog is being described as one of the market’s most-upgraded technology stocks. However, the stock’s sharp reaction after earnings highlights how demanding expectations have become. Three of the Market’s Most-Upgraded Tech Stocks Negative Sentiment: At a very high earnings multiple, Datadog remains vulnerable to further selling if revenue growth moderates. Analysts note that the company delivered strong results but was previously punished because growth failed to exceed elevated expectations. Is DDOG Stock Worth Investing In After Q2 Beat and Solid 2026 Guidance? Negative Sentiment: Director Amit Agarwal sold 20,000 shares under a pre-arranged Rule 10b5-1 plan, substantially reducing his direct holdings. The scheduled nature of the transaction limits its signaling value, but insider selling can weigh modestly on sentiment. SEC Insider Transaction Filing Hedge Funds Weigh In On Datadog Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. State Street Corp lifted its stake in Datadog by 106.8% in the 3rd quarter. State Street Corp now owns 13,732,777 shares of the company’s stock valued at $1,955,547,000 after buying an additional 7,091,075 shares in the last quarter. Norges Bank acquired a new stake in shares of Datadog in the fourth quarter worth approximately $469,461,000. Jennison Associates LLC increased its position in shares of Datadog by 43.7% during the fourth quarter. Jennison Associates LLC now owns 7,623,993 shares of the company’s stock worth $1,036,787,000 after purchasing an additional 2,316,994 shares in the last quarter. Invesco Ltd. increased its position in shares of Datadog by 119.2% during the third quarter. Invesco Ltd. now owns 4,075,721 shares of the company’s stock worth $580,383,000 after purchasing an additional 2,216,402 shares in the last quarter. Finally, Employees Provident Fund Board acquired a new position in Datadog in the 4th quarter valued at $251,582,000. 78.29% of the stock is owned by hedge funds and other institutional investors.
Datadog Trading Up 11.5% The company has a 50 day moving average of $248.96 and a 200 day moving average of $179.27. The company has a debt-to-equity ratio of 0.23, a quick ratio of 3.20 and a current ratio of 3.20. The stock has a market capitalization of $92.83 billion, a price-to-earnings ratio of 532.21, a P/E/G ratio of 23.28 and a beta of 1.54.
Datadog (NASDAQ:DDOG – Get Free Report) last announced its earnings results on Thursday, August 6th. The company reported $0.65 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.58 by $0.07. Datadog had a net margin of 4.48% and a return on equity of 5.67%. The company had revenue of $1.12 billion for the quarter, compared to analysts’ expectations of $1.08 billion. During the same quarter in the previous year, the company posted $0.46 EPS. The firm’s quarterly revenue was up 35.6% on a year-over-year basis. Datadog has set its Q3 2026 guidance at 0.630-0.650 EPS and its FY 2026 guidance at 2.500-2.540 EPS. On average, research analysts predict that Datadog, Inc. will post 0.66 EPS for the current fiscal year.
Datadog Company Profile (Get Free Report)
Datadog (NASDAQ: DDOG) is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog’s platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.
The company’s product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.
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Olivier Pomel, Chief Executive Officer of Datadog, Inc. (DDOG +10.51%), reported a sale of 127,141 shares of Class A Common Stock on August 5, 2026, according to a recent SEC Form 4 filing.
Transaction summaryMetricValueShares sold127,141Transaction value$36.5 millionPost-transaction shares (directly held)612,747Post-transaction value$173.51 millionTransaction value based on SEC Form 4 weighted average sale price ($286.71); post-transaction value based on August 05, 2026 market close ($283.17).
Key questionsWhat was the primary driver for this transaction?
The sale was conducted as part of a pre-established Rule 10b5-1 trading plan and coincided with the exercise of 127,141 Class B stock into Class A shares.How does this affect Olivier Pomel's total investment in the firm?
While this transaction reduced the executive's direct common stock position to 612,747 shares, the CEO continues to hold approximately 8.9 million derivative securities, which include both vested and unvested shares.What is the recent stock price performance context for this sale?
The execution occurred at a weighted average price of $286.71 per share, following a year of 113% appreciation through Aug. 5. As of the Aug. 6, 2026 market close, the stock was priced at $229.29.What is the composition of the executive's remaining direct ownership?
Following the reported activity, the insider's remaining direct stake consists of 612,747 shares of Class A Common Stock, representing a 0.17% ownership stake in the company.Company OverviewMetricValueShare Price (as of market close 2026-08-06)$229.29Market Capitalization$86.1 billionRevenue (TTM)$4.0 billionNet Income (TTM)$177.6 millionCompany SnapshotDatadog provides a comprehensive cloud-based Software-as-a-Service (SaaS) platform that combines infrastructure monitoring, application performance management, log management, and security surveillance to deliver end-to-end visibility across enterprise environments.The company operates on a subscription-based business model, generating recurring revenue from customers who pay for access to its integrated monitoring and analytics platform, with pricing typically scaled based on usage and feature adoption.Datadog serves developers, IT operations personnel, and business stakeholders across North America and internationally, with primary customers spanning mid-market to enterprise organizations seeking comprehensive observability solutions.Datadog has established itself as a leading provider of cloud-native monitoring and observability solutions, commanding a market cap of $86.1 billion. The company's integrated platform approach — combining infrastructure, application, and security monitoring into a single pane of glass — provides a competitive advantage in an increasingly complex cloud-native technology landscape.
With 8,100 employees and strong year-over-year growth momentum, Datadog continues to expand its addressable market through product innovation and geographic expansion.
What this transaction means for investorsThe Aug. 5 sale of Datadog stock by CEO Olivier Pomel for a weighted average price of $286.71 per share came a day before the company’s second quarter earnings report was released. After the report became public, Datadog shares fell to a close of $229.29 due to the announcement that the tech giant’s largest customer was reducing usage, which impacted the Q3 sales forecast.
That said, Pomel’s sale was a non-discretionary disposition executed as part of a Rule 10b5-1 trading plan, adopted in December of 2025. Such plans enable insiders to sell shares at predetermined times to avoid concerns of trading on non-public information.
Moreover, Pomel’s disposal left his direct holdings of 612,747 shares largely intact, since the shares came from a combination of fully-vested stock options and conversion of Class B shares into Class A. Post-transaction, he retained 8.8 million Class B stock, a substantial equity position that ensures continued alignment with shareholder interests.
Despite the news of usage reduction by its biggest customer, Datadog continued to close seven-figure deals with several large clients, and posted Q2 revenue of $1.12 billion, which represents 36% year-over-year growth.
Key Takeaways Datadog beat Q2 expectations as revenues rose 36% to $1.12 billion and non-GAAP EPS climbed 41.3%.DDOG raised 2026 revenue guidance to $4.45-$4.47 billion and non-GAAP EPS outlook to $2.50-$2.54.Datadog serves 750 AI customers, while its expanding AI portfolio targets demand across the AI stack. Datadog (DDOG - Free Report) , the leading AI-powered observability and security platform, delivered strong second-quarter 2026 results, with both the top and bottom lines exceeding expectations. Total revenues rose 36% to $1.12 billion, while non-GAAP EPS of 65 cents rose 41.3% year over year.
Building on this momentum, Datadog raised its full-year 2026 revenue guidance to $4.45-$4.47 billion, implying approximately 30% year-over-year growth. The company also increased its non-GAAP EPS outlook to $2.50-$2.54, underscoring management’s confidence in its growth line.
Analyst sentiment remains positive, with the Zacks Consensus Estimate projecting 2026 revenues of $4.41 billion, up 28.82% year over year. The earnings estimate of $2.43 per share has also been revised upward over the past 60 days, implying 18.54% year-over-year growth and indicating expectations for continued strong financial performance, which supports the stock’s investment outlook.
Image Source: Zacks Investment Research
The bullish sentiment is also reflected in DDOG's stock performance. The company’s shares closed at $233.93 on Friday, gaining 4.64% for the session, and have surged 72% year to date. This significantly outpaces the Zacks Internet - Software industry, which has declined 3.2%, and the broader Zacks Computer and Technology sector, which has gained 18.3%.
Datadog has also outperformed its peers, including Arista Networks (ANET - Free Report) , Paycom Software (PAYC - Free Report) and Unity Software (U - Free Report) , over the same time frame. While Arista Networks and Paycom Software shares have appreciated 44% and 34.9%, respectively, Unity Software shares have fallen 2.6%, highlighting Datadog’s stronger stock market performance.
YTD Price Performance Comparison
Image Source: Zacks Investment Research
Now, the question arises: is this the right time to add this stock to your portfolio? Let us examine the key factors driving the rise in the share price, the emerging AI opportunity and valuation to assess the stock’s investment prospects.
Key Q2 Tailwinds Supporting DDOG StockDatadog’s latest results highlight sustained business momentum, driven by growing customer adoption and the expanding role of its platform in managing increasingly complex cloud and AI workloads. Strong cash generation was another key positive, with the company delivering $316 million in operating cash flow and $279 million in free cash flow during the second quarter, translating into a 25% free cash flow margin. Datadog ended the quarter with approximately $5 billion in cash, cash equivalents and marketable securities, providing a strong financial cushion to support continued investments in product innovation, strategic initiatives and potential acquisitions.
Customer growth and expansion trends also remain encouraging. Datadog ended the second quarter with roughly 33,400 customers, while the number of customers generating at least $100,000 in ARR increased 23% year over year to approximately 4,720, accounting for about 91% of total ARR. Importantly, customers are increasingly adopting multiple Datadog products: 58% now use at least four products, compared with 52% a year ago, while 13% use 10 or more products, versus 7% a year ago. RUM has also surpassed $200 million in ARR and is growing more than 50% year over year. This increasing platform adoption could support higher customer spending and strengthen retention over the long term.
Another significant area of long-term growth is platform consolidation and enterprise-level expansion. In the second quarter, Datadog’s RPO reached $3.47 billion — a 43% increase year over year — while current RPO grew by approximately 40% during the same period. The company also won several large enterprise deals, including a multiyear deal worth more than $30 million in total contract value in which a major online media company standardized on Datadog and replaced four commercial and internal tools.
Datadog is also expanding into security, data observability, cloud cost management, digital experience and Bring Your Own Cloud. These opportunities could allow the company to capture a larger share of enterprise technology spending while increasing the value of its platform beyond traditional observability.
AI Adds a New Secular Growth Driver for DDOGAI is emerging as a powerful new growth catalyst for Datadog, complementing its established secular tailwinds from cloud migration and digital transformation. As AI workloads expand cloud consumption, they are driving greater demand for Datadog’s observability platform. The company now serves more than 750 AI customers, including all 10 of the top AI leaders, while AI monitoring volumes have accelerated sharply.
The opportunity could broaden further as AI moves from model training toward inference and agentic applications. Datadog sees observability opportunities across the entire AI stack — from GPUs and infrastructure to LLMs, tool calls, applications and agent outcomes. Its expanding Datadog for AI portfolio, including Agent Observability, GPU Monitoring, Data Observability and AI Guard, positions DDOG to capture this emerging demand.
DDOG Stock Trades at a PremiumDatadog shares are trading at a premium, as suggested by a Value Score of F.
In terms of the forward 12-month price-to-sales (P/S), Datadog is trading at 16.81X, higher than the industry’s 4.05X. DDOG also trades at a higher multiple than Arista Networks (16.64X), Paycom Software (4.22X) and Unity Software (7.77X).
DDOG Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
ConclusionDatadog enters the second half of 2026 with compelling fundamental momentum. Accelerating customer adoption, expanding enterprise penetration, strong cash generation and AI-driven demand provide multiple avenues for long-term growth. The company’s ability to expand from observability into security and AI management could further increase its addressable market. These factors are expected to push the stock upward and justify a premium valuation.
Datadog currently carries a Zacks Rank #2 (Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Datadog (DDOG - Free Report) Datadog is a monitoring and analytics platform for developers, IT operations teams and business users in the cloud age. The company's business runs around its portfolio of over 1,000 out-of-the-box integrations including public cloud, private cloud, on-premise hardware, databases and third-party software.
DDOG is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.
Additionally, the company could be a top pick for growth investors. DDOG has a Growth Style Score of A, forecasting year-over-year earnings growth of 18.5% for the current fiscal year.
For fiscal 2026, two analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.02 to $2.43 per share. DDOG boasts an average earnings surprise of +15.4%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, DDOG should be on investors' short list.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of DDOG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Every so often, the market serves up a reaction so at odds with the underlying news that it's worth asking what investors are really thinking. Datadog Inc. NASDAQ: DDOG delivered one such moment this week, when the observability software company followed up an excellent quarter with a 19% drop in its share price.
Datadog Today
$236.67 +7.38 (+3.22%)
As of 03:26 PM Eastern
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52-Week Range$98.01▼
$292.72P/E Ratio623.72
Price Target$276.20
On the face of it, this makes little sense. Datadog beat expectations on both revenue and earnings, comfortably raised its guidance for the rest of the year, and pointed to demand trends that were, if anything, accelerating. These aren't the hallmarks of a company in trouble, yet the shares slumped regardless, leaving investors to puzzle over what the market found so disappointing.
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The answer, as is so often the case, has less to do with the results themselves and more to do with the towering expectations that preceded them. For those willing to look past the knee-jerk reaction, that disconnect may have opened up an opportunity.
A Quarter That Beat on Almost Every MeasureStart with the numbers, because they were hard to fault. Revenue grew 36% year-over-year, coming in above the top end of the company's own guidance and marking the fastest growth Datadog has posted in several years. Earnings jumped sharply too, comfortably ahead of what analysts had expected.
The strength ran deeper than the headline figures. The company generated healthy free cash flow, while the metrics that speak to future demand, its billings and the value of contracted work still to be delivered, both grew even faster than revenue. That's a strong sign customers aren't just spending more today, but committing to spend more down the line.
Perhaps most reassuringly, the growth was broad-based rather than narrowly concentrated. Demand from customers outside the artificial intelligence (AI) boom actually accelerated, showing that Datadog's success isn't solely dependent on a single fashionable theme. On top of all that, management raised its full-year outlook well ahead of expectations.
So Why Did the Stock Tumble?If the quarter was so strong, the sell-off demands an explanation, and it comes down to two things. The first is how much success had already been priced in. The stock had already staged a massive 2026 rally heading into the report, setting an extraordinarily high bar for this one.
When a stock has already staged that kind of rally, merely being excellent is sometimes not enough to prevent profit-taking. Indeed, this is a theme we've seen play out several times already in the current earnings season.
The second, more specific concern around Datadog's trajectory involved a single large customer. Management disclosed that its biggest client, widely believed to be a major AI chatbot company, would reduce its usage from the current quarter, a change duly baked into the updated guidance.
In a market hypersensitive to any hint of slowing momentum, that disclosure alone was enough to spook investors.
Reading Between the Lines of the ReactionHere’s where it pays to separate the noise from the signal. A pullback from one large customer sounds alarming. Still, Datadog spreads its revenue across thousands of customers, with the vast majority of recurring revenue coming from a broad base of larger accounts rather than any single name.
Even as one major client trims its spending, the underlying engine of growth and the thousands of businesses steadily expanding their use of Datadog's tools will keep humming along.
In other words, the very concern that spooked the market may prove far less significant than the reaction implied. One customer pulling back is a manageable bump for a business this broadly diversified, not the structural crack that a double-digit share price fall might suggest.
Weighing the Opportunity Against the RisksDatadog Stock Forecast Today12-Month Stock Price Forecast:
$274.05
15.96% Upside
Moderate Buy
Based on 45 Analyst Ratings
Current Price$236.33High Forecast$340.00Average Forecast$274.05Low Forecast$158.00Datadog Stock Forecast Details
None of this is to dismiss the bears entirely, because they hold one especially strong card—valuation. Even after the drop, Datadog still trades at a triple-digit price-to-earnings ratio, leaving little room for error and requiring the company to keep growing at a rapid pace for years to justify the price.
For those of us on the sidelines, however, there’s no doubt that this was, by almost any measure, a strong report from a dominant company that's still growing quickly and generating plenty of cash.
Consider Raymond James’ reiterated Outperform rating on Datadog shares and its $280 price target for context, not to mention MarketBeat’s consensus rating of Moderate Buy.
Sure, the market is choosing, for now at least, to focus on the blemishes rather than the substance, but in doing so, it may be handing longer-term believers a golden opportunity to get involved.
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Key Takeaways Datadog's Q2 revenues rose 36% to $1.12 billion, while non-GAAP EPS reached 65 cents.More than 750 AI customers use Datadog, with 31 spending over $1 million annually. Datadog sees Q3 revenues of $1.135B-$1.145B after derisking lower usage at its largest customer. Datadog, Inc. (DDOG - Free Report) used its second-quarter 2026 earnings call to emphasize accelerating demand across AI and non-AI customers, while acknowledging a usage reduction at its largest customer.
Co-Founder and CEO Olivier Pomel framed AI as an additional growth driver, citing stronger cloud consumption, new observability workloads and wider adoption of Bits AI and security products.
DDOG Sees Broad-Based Growth AccelerationRevenues rose 36% year over year to $1.12 billion, while non-GAAP earnings were 65 cents per share. Revenues and earnings exceeded the Zacks Consensus Estimate of $1.08 billion and 58 cents, respectively.
CFO David Obstler said sequential revenue growth of 11% was the strongest since the second quarter of 2022, with a record $115 million added from the first quarter. Non-AI customer revenue growth accelerated to the high-20% range.
Datadog ended the second quarter with about 4,720 customers generating at least $100,000 in ARR, up from about 3,850 a year earlier.
Datadog Builds Around AI-Native DemandPomel said more than 750 AI customers use Datadog, including all 10 companies management identifies as leading AI players. Obstler added that 31 AI customers spend more than $1 million annually, including eight above $10 million.
Pomel said MCP tool calls quadrupled again sequentially and rose more than 22 times versus Q4 2025. He described observability opportunities across GPUs, models, agents and the applications those agents call.
Obstler said enterprise new-logo annualized bookings more than doubled year over year. New customers accounted for about 30% of year-over-year revenue growth, up from 25% in the first quarter.
DDOG Pushes Bits AI Deeper Into OperationsPomel said Bits AI has expanded beyond alert investigation into chat, monitoring management, coding, testing and release validation. Datadog is also rolling out AI-credit packaging as its use cases broaden.
A Bank of America analyst asked whether automation could reduce traditional observability activity. Pomel said Bits AI users are deploying more of the platform, creating more dashboards and alerts, and bringing more users into Datadog.
Pomel also said Bits Security Analyst is being separated from Datadog's SIEM so it can work with other SIEMs, widening the market for AI-driven security operations.
Datadog Derisks Largest-Customer UsageManagement disclosed a nine-figure renewal with its largest customer, but said usage will decline beginning in the third quarter. Pomel said Datadog fully derisked guidance for that customer so the account would not overshadow broader business trends.
For the third quarter, revenues are expected to be $1.135 billion to $1.145 billion, representing 28% to 29% growth, with non-GAAP earnings estimated to be 63 to 65 cents per share. Full-year revenue guidance is $4.45 billion to $4.47 billion.
A Morgan Stanley analyst pressed for renewal details and the lower usage. Pomel declined to discuss customer-specific economics, while stressing that growth excluding the largest customer has continued to accelerate.
DDOG Q&A Tests Sustainability and SpendA Goldman Sachs analyst raised customer concerns about Datadog bills. Pomel said the company must show its software saves customers money or helps them make money, and highlighted AI cost control as a growing priority.
Pomel said Infinite Cardinality Metrics is designed to reduce billing unpredictability when customers send more granular data. He tied the product to rising data volumes and more complex questions from AI applications.
A JPMorgan analyst asked whether non-AI acceleration is sustainable. Pomel said growth is largely coming from existing customers through higher volumes, cloud migration and broader product adoption. Obstler also cited expanded go-to-market capacity.
Datadog Keeps Investing Into ScalePomel closed with confidence on product development and go-to-market execution, saying Datadog has more products planned for the remainder of the year and large sales pipelines to pursue.
Obstler said R&D and go-to-market investments are producing results and positioning the company for continued execution.
DDOG's Zacks Signals Stay MixedDDOG carries a Zacks Rank #2 (Buy), alongside a Growth Score of A, Momentum Score of A and a VGM Score of B. Under the Zacks Style Scores framework, A and B are the more favorable grades, especially when paired with a Zacks Rank #1 (Strong Buy) or #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Value Score of F tempers that profile because the framework gives its strongest preference to top-ranked stocks with A or B individual Style Scores. The Zacks Rank can change as earnings estimates are revised after the reported results.
AI is entering a radical new phase that goes above and beyond generative AI and chatbots. Undoubtedly, with Palantir (NASDAQ:PLTR | PLTR Price Prediction) clocking in a jaw-dropping Q2 beat while Claude Mythos changed the cybersecurity world and a few AI agents went rogue (models from OpenAI and Anthropic), I think we’ve moved above and beyond that initial hype phase.
With ROI and monetization in sight while some firms, like Palantir and Anthropic, prove that the money-making potential of enterprise AI is very much the real deal, questions linger as to where the technology could be taking us and the economy next, and whether there’s something that’s just a bit more interesting than just the “picks and shovels” plays in the semiconductor names, especially as the crowded trade looks to give back more of the year-to-date gains.
Whether it’s the dangerous AI agent breaches or the explosive value being unlocked within the enterprise by Palantir’s agents, it feels like enterprise software and cybersecurity are never going to be the same. And the big question, in my view, is which industries will be next to be shifted in a drastic way. Indeed, perhaps every industry is bound to change in a profound way as agents move further into the mainstream.
As we shift gears from observability of AI agents towards autonomous “self-healing” systems and concepts such as recursive self-improvement (RSI), which is what AI labs seem to be shooting for, questions linger as to what kind of transformation the corporate world could face once the AI buildout gets compute to a level to power such next-level applications at scale. Indeed, a bit of an experimental phase is bound to hit, but after that, the possibilities could be difficult to fathom.
Palo Alto Networks (NASDAQ:PANW) and Datadog (NASDAQ:DDOG) stand out as firms that could win as AI agents begin to fix issues shortly after they spot them.
Palo Alto Networks Palo Alto Networks is a name that didn’t take long to rebound from the SaaS-pocalypse earlier this year. Despite that bump in the road, shares are still up 114% in the past year at a fresh all-time high just shy of $360 per share. With rogue AI agents and soaring cyberthreats boosting the industry, perhaps Palo Alto Networks is a name that could have runway, especially as the firm looks to not only spot threats, but contain them, roll things back, and run an autonomous real-time defence.
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The Cortex XSIAM (Extended Security Intelligence and Automation Management) is equipped to take control against a threat or breach, take care of things, and roll things back, effectively fixing any damage that a breach may have caused.
Indeed, the technology is a thing of science fiction, but in the agent era, it’s the modern way to do cybersecurity. While the stock has been hot of late, I still think the name isn’t getting the respect it deserves as it looks to rise to become the next big winner in AI software.
Datadog Datadog shares took a brutal bruising on Thursday, with shares tumbling 19% after a decent quarter that failed to meet sky-high expectations going into the number. There was nothing wrong with the quarter, perhaps other than the fact that it wasn’t a shocking blowout. Add the margin pressures from agentic AI tooling spend into the equation, and perhaps it’s no mystery as to why so many weak hands are departing the name.
In my view, the dip in the observability play is a great buying opportunity as the firm looks to prove itself as another AI software star that can effectively monetize in this agentic era. Indeed, hyper-growth and sky-high margins may very well be in the cards for the software companies that effectively harness the power of AI and agents.
As the firm looks to take things several steps beyond just monitoring, I do think Datadog stands out as a firm that can win big once self-healing systems rise, thanks in part to its telemetry moat, which is an absolute must for an agent to respond in real-time. With the Bits AI agent moving fast, it feels like auto-fix could mark the next frontier. Of course, perhaps there’s no better firm to keep agents operating on the rails than the number-one watchdog that is Datadog.
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Key Takeaways Datadog beat Q2 EPS and revenue guidance as earnings rose 41.3% and revenues increased 36% year over year.DDOG added record sequential revenues, while enterprise bookings & AI-related customer growth remained strong.Datadog's 2026 outlook includes expected lower usage from its largest customer after contract renewal. Datadog (DDOG - Free Report) reported second-quarter 2026 non-GAAP earnings per share (EPS) of 65 cents, which increased 41.3% from the year-ago quarter and exceeded the company's guidance of 57-59 cents. The figure beat the Zacks Consensus Estimate by 12.07%.
The company's revenues of $1.121 billion rose 36% year over year and surpassed the prior guided range of $1.07-$1.08 billion. The figure beat the consensus mark by 3.85%.
Quarter-over-quarter revenue growth of 11% marked the strongest sequential pace since the second quarter of 2022, with the company adding $115 million in sequential revenues, a record for Datadog. Revenue growth among non-AI customers also accelerated to the high-20% range year over year, up from the mid-20% range in the first quarter.
Q2 Details of DDOGThe company ended the second quarter with approximately 33,400 customers, up 6.4% from about 31,400 in the prior-year period.
In the quarter under review, Datadog had about 4,720 customers with an Annualized Run Rate (ARR) of $100,000 or more, up 22.6% from about 3,850 in the year-ago quarter. These customers generated about 91% of total ARR, up from 89% a year ago.
As of the end of the second quarter, 58% of customers used four or more products, up from 52% in the year-ago period. Furthermore, 37% of customers used six or more products, up from 29% a year ago, while 22% used eight or more products, up from 14%, and 13% used 10 or more products, up from 7% in the prior-year quarter.
Datadog reported a trailing 12-month net revenue retention rate in the low-120% range in the second quarter, similar to the first quarter and up from about 120% in the year-ago period, while gross revenue retention remained in the mid-to-high 90% range.
New logo annualized bookings in the enterprise segment more than doubled year over year, and new customers continued to ramp faster, contributing about 30% of year-over-year revenue growth, up from 25% in the first quarter. Real User Monitoring surpassed $200 million in ARR and accelerated to more than 50% growth year over year at that scale.
Datadog's AI-native customer cohort continued to expand, with more than 750 AI-related customers as of the second quarter, including all of the top 10 AI leaders. The number of Model Context Protocol tool calls on the platform quadrupled sequentially and grew more than 22 times versus the fourth quarter of 2025. Management also disclosed that its largest customer reduced usage entering the third quarter, a development that has been incorporated into the company's third-quarter and full-year 2026 guidance; the customer renewed its contract with Datadog during the quarter.
Operating Details of DDOGIn the second quarter, non-GAAP gross profit increased 33.3% year over year, reaching $892.3 million. Datadog's non-GAAP gross margin was 79.6%, contracting from 80.9% in the year-ago quarter, primarily reflecting continued investment in new product innovation.
Research & development expenses on a non-GAAP basis grew 23.5% year over year to $325.1 million. Research & development, as a percentage of revenues, contracted roughly 290 basis points to 29%.
Sales and marketing expenses on a non-GAAP basis rose 30.2% year over year to $260.4 million. Sales and marketing expenses, as a percentage of revenues, contracted nearly 100 basis points to 23.2%.
General & administrative expenses on a non-GAAP basis increased 18.8% year over year, reaching $49.8 million in the reported quarter. General and administrative expenses, as a percentage of revenues, contracted roughly 60 basis points to 4.4%.
Datadog reported a non-GAAP operating income of $257 million, up 56.6% year over year. Its non-GAAP operating margin expanded to 23%, up from 20% in the prior-year quarter.
Datadog's Balance Sheet & Cash FlowAs of June 30, 2026, Datadog had cash, cash equivalents and marketable securities of $5 billion, up 4.8% from $4.8 billion as of March 31, 2026.
Operating cash flow was $316 million in the reported quarter, which declined from $335 million in the previous quarter but increased 57.9% year over year. Free cash flow during the quarter was $278.7 million compared with $291 million in the prior quarter and $165.4 million in the year-ago quarter, marking a 68.6% year-over-year increase, with a free cash flow margin of 25% compared with 20% a year ago.
Billings totaled $1.18 billion in the quarter, up 38% year over year, while remaining performance obligations were $3.47 billion, up 43% year over year. Current remaining performance obligations grew about 40% year over year.
Datadog's Guidance for Q3 & 2026For the third quarter of 2026, Datadog anticipates revenues between $1.135 billion and $1.145 billion, representing 28-29% year-over-year growth. Non-GAAP operating income is expected in the range of $260-$270 million, implying an operating margin of 23-24%. Non-GAAP EPS is expected in the range of 63-65 cents.
For fiscal 2026, Datadog anticipates revenues between $4.45 billion and $4.47 billion, suggesting about 30% year-over-year growth. Non-GAAP operating income is expected in the range of $1.01-$1.03 billion, implying an operating margin of about 23%. Non-GAAP EPS is projected to be between $2.50 and $2.54.
Management noted that the full-year guidance already reflects the expected usage reduction from its largest customer; excluding that customer, the underlying business has shown five consecutive quarters of accelerating growth.
Zacks Rank & Other Stocks to ConsiderDatadog currently carries a Zacks Rank #2 (Buy).
Kimball Electronics (KE - Free Report) , Quantum (QMCO - Free Report) and Lumentum (LITE - Free Report) are among the top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Currently, Kimball Electronics sports a Zacks Rank #1 (Strong Buy), while Quantum and Lumentum carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kimball Electronics shares have inched up 1.8% in the past six months. KE is scheduled to report its fiscal fourth-quarter 2026 results on Aug. 13.
Quantum's shares have surged 96% in the past six months. QMCO is scheduled to report its fiscal first-quarter 2027 results on Aug. 10, 2026.
Lumentum shares have gained 48.9% in the past six months. LITE is slated to report its fiscal fourth-quarter 2026 results on Aug. 11.
For the quarter ended June 2026, Datadog (DDOG - Free Report) reported revenue of $1.12 billion, up 35.6% over the same period last year. EPS came in at $0.65, compared to $0.46 in the year-ago quarter.
The reported revenue compares to the Zacks Consensus Estimate of $1.08 billion, representing a surprise of +3.85%. The company delivered an EPS surprise of +12.07%, with the consensus EPS estimate being $0.58.
While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.
Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.
Here is how Datadog performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Remaining Performance Obligations: $3.47 billion versus $3.6 billion estimated by three analysts on average.Customers: 33,400 compared to the 34,060 average estimate based on three analysts.Customers >$100k in ARR: 4,720 versus the three-analyst average estimate of 4,633.View all Key Company Metrics for Datadog here>>>
Shares of Datadog have returned -14.8% over the past month versus the Zacks S&P 500 composite's +2.3% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.
Shares of Datadog (DDOG -19.03%) sank about 19% Thursday after the software company reported its second-quarter results. The reaction might seem odd.
Revenue grew 36% year over year, landing about $40 million above the high end of the range management forecast in May. Adjusted earnings came in ahead of the company's own guidance, too. And management raised its full-year outlook for both revenue and earnings.
But the market wasn't grading the quarter. It was grading what comes next. And tucked inside the raised outlook is a number implying Datadog's growth could slow meaningfully from here.
Image source: The Motley Fool.
A quarter with little to complain about Datadog sells observability software (the tools companies use to monitor their applications, infrastructure, and security in one place). Demand for those tools has been booming as businesses roll out artificial intelligence (AI) applications they need to watch closely.
Datadog's second-quarter revenue rose 36% year over year to $1.12 billion. That's faster than the 32% pace it managed in the first quarter, and faster still than the 28% posted as recently as the third quarter of 2025. Customers spending $100,000 or more annually grew about 23% year over year, to about 4,720 from about 3,850. Non-GAAP (adjusted) operating income was $257 million, a 23% margin, up from 22% in the prior quarter. Free cash flow was $279 million, about a quarter of revenue.
The report also cleared the bar management itself set. In May, the company's forecast called for second-quarter revenue of $1.07 billion to $1.08 billion, and adjusted earnings of 57 to 59 cents per share. It delivered $1.12 billion and 65 cents.
Of course, not everything was perfect. On a GAAP basis, operating income was roughly break-even at $5 million, so the impressive profit figures are adjusted ones.
Still, Datadog finished the quarter holding $5.0 billion of cash and investments, and it produced $316 million in operating cash flow during the period.
Management responded by raising its outlook: It now expects full-year revenue of $4.45 billion to $4.47 billion, up from the $4.30 billion to $4.34 billion it forecast in May. The full-year adjusted earnings forecast moved up as well -- $2.50 to $2.54 per share now, against $2.36 to $2.44 before. And guidance calls for adjusted operating income of $1.01 billion to $1.03 billion, which would keep the margin near 23%.
The number investors appear to have seized on So why the sell-off? I think the answer sits in the third-quarter guidance.
The new outlook puts third-quarter revenue at $1.135 billion to $1.145 billion, along with adjusted earnings of 63 to 65 cents per share. Datadog generated $886 million of revenue in the third quarter of 2025, meaning the midpoint of the new range implies year-over-year growth of about 29% -- a big step down from the 36% pace the company just delivered.
In other words, after adding more than $110 million in sequential revenue last quarter, Datadog is forecasting only about $20 million more in the current one.
Sure, the company just cleared its own second-quarter revenue bar by about $40 million, and it may simply be guiding conservatively again. But even a repeat of that outperformance would put third-quarter growth at about 34% -- below the pace it just posted.
Today's Change
(
-19.03
%) $
-53.88
Current Price
$
229.29
That step-down matters because of the price. Even after Thursday's drop, the stock was still trading near $229 as of this writing, and it sells for about 91 times the adjusted earnings management expects for the full year. That's a price that only works if growth stays exceptional.
After all, heading into the report, the stock had nearly tripled from its 52-week low of $98.01 and closed Wednesday within about 4% of its 52-week high. Expectations were enormous.
Ultimately, I think the sell-off says more about the stock's starting point than about the business. Datadog is executing about as well as a software company can. Even the growth rate the new guidance implies -- about 29% -- would be fast for a business on pace for more than $4 billion in annual revenue.
But slowing growth is a hard sell at a valuation above 90 times expected earnings.
Datadog (DDOG) is experiencing a selloff today, despite reporting robust Q2 results. The company surpassed earnings per share (EPS) expectations, with revenue r
Datadog, Inc. (DDOG) Q2 2026 Earnings Call August 6, 2026 8:00 AM EDT
Company Participants
Yuka Broderick - Investor Relations
Olivier Pomel - Co-Founder, CEO & Director
David Obstler - Chief Financial Officer
Conference Call Participants
Sanjit Singh - Morgan Stanley, Research Division
Raimo Lenschow - Barclays Bank PLC, Research Division
Gabriela Borges - Goldman Sachs Group, Inc., Research Division
Michael Cikos - Needham & Company, LLC, Research Division
Aleksandr Zukin - Wolfe Research, LLC
Koji Ikeda - BofA Securities, Research Division
Samik Chatterjee - JPMorgan Chase & Co, Research Division
Howard Ma - Guggenheim Securities, LLC, Research Division
Andrew Sherman - TD Cowen, Research Division
Brad Reback - Stifel, Nicolaus & Company, Incorporated, Research Division
Ittai Kidron - Oppenheimer & Co. Inc., Research Division
Andrew DeGasperi - BNP Paribas, Research Division
Presentation
Operator
Good day, and thank you for standing by. Welcome to the Q2 2026 Datadog Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Yuka Broderick, Senior Vice President of Investor Relations. Please go ahead.
Yuka Broderick
Investor Relations
Thank you, Lauren. Good morning, and thank you for joining us to review Datadog's second quarter 2026 financial results, which we announced in our press release issued this morning. Joining me on the call today are Olivier Pomel, Datadog's Co-Founder and CEO; and David Obstler, Datadog's CFO. During this call, we will make forward-looking statements, including statements related to our future financial performance, our outlook for the third quarter and the fiscal year 2026 and related notes and assumptions, our product capabilities and our ability to capitalize on market opportunities.
The words anticipate, believe, continue, estimate, expect, intend, will and similar expressions are intended to identify forward-looking statements or similar indications of future expectations. These statements reflect our views today and are subject to a variety of
Datadog Inc (NASDAQ:DDOG) shares tumbled more than 18% on Thursday even after the software company delivered what analysts called a high-quality quarter, as investors focused on decelerating bookings growth and softer-than-expected third-quarter guidance.
Datadog's revenue grew 35.6% year-over-year in the second quarter, ahead of the company's 29-31% guidance range and accelerating from 32% growth in the first quarter.
Jefferies analysts noted the 11% sequential revenue increase was the strongest since the second quarter of 2022.
Datadog posted non-GAAP operating margin of 23% and free cash flow margin of 25%, with Jefferies noting the strength was broad-based, as non-AI customer revenue growth accelerated to the high-20% range and new-logo bookings more than doubled year-over-year, now contributing roughly 30% of revenue growth. The company also renewed a nine-figure contract with its largest customer, which Jefferies said removes a key overhang on the stock.
Despite the results, investors zeroed in on guidance. Datadog raised its full-year 2026 revenue guidance by $140 million following a $46 million second-quarter beat, implying about 30% growth versus a prior outlook of 25-27%. However, third-quarter guidance of 28-29% year-over-year growth came in below expectations and implies just 1.7% sequential growth at the midpoint, compared with 2.6-2.7% in the prior two years' third-quarter guides.
Remaining performance obligations, a measure of contracted future revenue, grew 43% year-over-year to $3.47 billion but declined sequentially for the first time in multiple years, decelerating from 51% growth in the first quarter. Current RPO growth also moderated to around 40% from the mid-40%s.
Jefferies said the RPO deceleration warrants attention given stronger commentary around bookings, new-logo activity and initial customer ramps, though it noted longer contract durations can affect comparability.
Jefferies maintained its price target of $260, based on 17 times projected 2027 revenue, saying risk/reward has become more balanced following the pullback.
Datadog (DDOG - Free Report) came out with quarterly earnings of $0.65 per share, beating the Zacks Consensus Estimate of $0.58 per share. This compares to earnings of $0.46 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +12.07%. A quarter ago, it was expected that this data analytics and cloud monitoring company would post earnings of $0.5 per share when it actually produced earnings of $0.6, delivering a surprise of +20%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Datadog, which belongs to the Zacks Internet - Software industry, posted revenues of $1.12 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.85%. This compares to year-ago revenues of $826.76 million. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Datadog shares have added about 108.2% since the beginning of the year versus the S&P 500's gain of 12.8%.
What's Next for Datadog?While Datadog has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Datadog was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.60 on $1.09 billion in revenues for the coming quarter and $2.42 on $4.34 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
DocuSign (DOCU - Free Report) , another stock in the same industry, has yet to report results for the quarter ended July 2026.
This provider of electronic signature technology is expected to post quarterly earnings of $1.08 per share in its upcoming report, which represents a year-over-year change of +17.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
DocuSign's revenues are expected to be $868.04 million, up 8.4% from the year-ago quarter.
5 Tech Stocks Holding Their Ground Through the AI Trade PullbackDatadog NASDAQ: DDOG reported second-quarter revenue of $1.12 billion, up 36% from a year earlier and above the high end of its guidance range, as growth accelerated across both AI-focused and non-AI customers.
Co-founder and Chief Executive Officer Olivier Pomel said revenue growth among non-AI customers reached the high 20% range year over year, compared with the mid-20% range in the prior quarter and 18% in the year-ago period. He said the company sees broader adoption of AI driving cloud usage, modernization efforts and demand for its observability, security and analytics platform.
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The AI Boom Has a Hidden Winner—And It's Not NVIDIA“Our broad base of customers, from the most nimble startups to the largest and most established enterprises, are all adopting AI,” Pomel said.
Customer Growth and Financial Results Datadog ended the quarter with about 33,400 customers, compared with approximately 31,400 a year earlier. Customers with annual recurring revenue of at least $100,000 totaled about 4,720, up from roughly 3,850 a year ago, and accounted for approximately 91% of ARR.
3 Most Upgraded Stocks Last Month According to MarketBeatThe company reported $1.18 billion in billings, up 38% year over year, while remaining performance obligations rose 43% to $3.47 billion. Current RPO increased about 40%.
Non-GAAP gross profit was $892 million, representing a 79.6% gross margin, compared with 80.2% in the preceding quarter and 80.9% a year earlier. Non-GAAP operating income was $257 million, or a 23% margin, versus a 22% margin in the prior quarter and 20% a year ago.
Cash flow from operations was $316 million, and free cash flow was $279 million, producing a 25% free-cash-flow margin. Datadog ended the quarter with $5 billion in cash equivalents and marketable securities.
Chief Financial Officer David Obstler said the company’s 11% sequential revenue growth was its highest since the second quarter of 2022, while its $115 million sequential revenue increase was a record.
Datadog’s trailing-12-month net revenue retention rate remained in the low 120% range, similar to the prior quarter. Gross revenue retention was in the mid-to-high 90% range, according to Obstler.
AI Customers, Product Adoption and New Deals Datadog said more than 750 AI customers used its platform as of the second quarter, including all 10 of the company’s identified top AI leaders. Within the AI customer group, 31 customers spent more than $1 million annually, including eight spending more than $10 million annually.
The company also said new customers accounted for about 30% of year-over-year revenue growth in the quarter, up from 25% in the first quarter. Enterprise new-logo annualized bookings more than doubled from a year earlier, Obstler said.
Product adoption continued to expand. Datadog said 58% of customers used four or more products, up from 52% a year earlier. Customers using six or more products rose to 37% from 29%, while those using 10 or more products increased to 13% from 7%.
Real User Monitoring exceeded $200 million in ARR and grew more than 50% year over year, Pomel said.
During its DASH user conference in June, Datadog announced more than 100 products and features. The additions included expanded Bits AI capabilities for incident detection, investigation, remediation, code fixes, testing and release validation. The company also introduced products aimed at AI workload monitoring and security, including Agent Console, Data Observability, AI Guard and additional GPU and agent observability offerings.
Datadog also introduced Infinite Cardinality Metrics, which it said will allow users to analyze increasingly complex metrics data without additional costs tied to cardinality. Pomel said the offering addresses a longstanding concern from customers over unpredictable costs associated with sending more granular data.
The company cited several large customer wins, including a multiyear deal worth more than $30 million in total contract value with an online media company. That customer selected Datadog to standardize its platform across its business, replacing four commercial and internal tools. The deal included Datadog’s largest Bring Your Own Cloud win to date, involving a petabyte-scale logging deployment.
Largest Customer Reduction Included in Outlook Datadog said it signed a nine-figure renewal with a longtime leading AI customer that uses 17 Datadog products. However, the company expects a reduction in that customer’s usage beginning in the third quarter and incorporated the decline into its outlook.
Pomel said Datadog renewed the customer but declined to discuss further contractual details. He emphasized that the broader business continued to accelerate and said the company had “fully de-risked” its guidance for the rest of the year with respect to the account.
“If you backed out our largest customer from our growth, you get pretty much the same growth rate as the rest of the business,” Pomel said.
Outlook For the third quarter, Datadog expects revenue of $1.135 billion to $1.145 billion, representing year-over-year growth of 28% to 29%. It forecast non-GAAP operating income of $260 million to $270 million, or an operating margin of 23% to 24%, and non-GAAP diluted earnings per share of $0.63 to $0.65.
For fiscal 2026, the company forecast revenue of $4.45 billion to $4.47 billion, representing approximately 30% growth. Datadog expects non-GAAP operating income of $1.01 billion to $1.03 billion, a 23% operating margin, and non-GAAP diluted earnings per share of $2.50 to $2.54.
Obstler said the company’s guidance methodology had not changed and continues to incorporate recent business trends along with conservatism. Datadog expects capital expenditures and capitalized software costs to equal 4% to 5% of revenue in fiscal 2026.
About Datadog (NASDAQ:DDOG)Datadog NASDAQ: DDOG is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog's platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.
The company's product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.
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HomeIndustriesEarnings ResultsEarnings ResultsThe cloud-monitoring company faced a high bar due to its strong stock performance this year and ended up beating expectations by less than it did in the prior quarterAug. 6, 2026, 9:46 a.m. ET
The bar was high for Datadog heading into earnings, given that shares had more than doubled on the year.
And while the cloud-monitoring company may have delivered revenue results and guidance that were better than the consensus view, investors seemed to be looking for more.
Datadog shares DDOG dropped nearly 18% at market open on Thursday despite the cloud monitoring and analytics company reporting better-than-expected second-quarter earnings and raising its full-year financial outlook.
The sharp decline came after the stock had reached a record closing high earlier this week, with analysts pointing to profit-taking and elevated investor expectations for 2H revenue as key reasons behind the selloff.
Some market participants cited management's third-quarter guidance, which, although above Wall Street estimates, implied a notable sequential slowdown in revenue growth compared with the first half of the year, as reason behind the stock price decline.
The software company reported adjusted earnings of 65 cents per share for the second quarter, compared with 46 cents a year earlier and ahead of analysts' expectations of 58 cents, according to FactSet.
Revenue rose 36% year over year to $1.12 billion, surpassing consensus estimates of $1.08 billion.
Looking ahead, Datadog expects third-quarter adjusted earnings of between 63 cents and 65 cents per share, with revenue projected in the range of $1.135 billion to $1.145 billion.
Those figures remain above Wall Street expectations of 61 cents per share and $1.11 billion in revenue.
However, investors focused on the implied slowdown in growth after a strong first half of the year.
"Datadog just showed how expensive one quarter of deceleration can be," AInvest wrote on X.
"Q3 guidance points to roughly 29% growth. After a 94% six-month rally, the stock is down about 21% premarket. The same reset is hitting $APP (-19%), $HUBS (-23%), and $FIG (-14%). Strong results can still meet unforgiving valuations when acceleration is already priced in," the post added.
For the full fiscal year, the company raised its outlook, forecasting adjusted earnings of $2.50 to $2.54 per share and revenue between $4.45 billion and $4.47 billion.
The revised guidance is higher than its previous forecast and comfortably ahead of analysts' estimates of $2.42 per share on revenue of $4.35 billion.
Datadog has been one of the strongest-performing software stocks this year, with shares gaining more than 110% in 2026 before Thursday's decline.
The strong rally had left investors with little room for disappointment.
Evercore ISI analysts said the market reaction appeared excessive.
"The initial reaction seems a bit extreme as the company delivered solid F2Q results, and while the lack of revenue acceleration in 2H may weigh on the uber bull case, DDOG remains one of the best growth stories in software," they said.
Datadog remains closely tied to the expanding artificial intelligence market, providing monitoring and observability tools for AI chips, coding agents and cloud infrastructure.
Its customer base includes AI developers and major cloud providers such as OpenAI and Amazon Web Services.
The company also reported continued expansion among its largest customers.
Datadog ended the quarter with approximately 4,720 customers generating annual recurring revenue of more than $100,000, compared with 3,850 customers a year earlier.
Chief Executive Olivier Pomel said AI adoption continues to drive customer demand for the company's platform.
"Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions," Pomel said in the earnings release.
"We are innovating rapidly to help our customers manage rising complexity, and increasingly build autonomy into their operations."
Three enterprise software names are moving in opposite directions Thursday morning after earnings results. SoundHound AI (NASDAQ:SOUN) stock is up 12% to $7.23, Unity Software (NYSE:U | U Price Prediction) shares are up 11% to $39.33, and Datadog (NASDAQ:DDOG) shares are down 15% to $239.71.
The Invesco QQQ Trust (NASDAQ:QQQ) (which tracks the NASDAQ 100 index) is roughly flat, so today’s action is stock-specific. Traders are separating the winners from the losers on valuation and expectations.
SoundHound AI Rally Follows a Beat and a Raise SoundHound posted Q2 revenue of $61.9 million, beating the $52.4 million consensus estimate. Furthermore, the company’s adjusted EBITDA loss narrowed to $9.6 million.
Management raised full-year 2026 revenue guidance to $230 million to $260 million, pending the LivePerson acquisition closing before year-end. SoundHound ended the quarter with $203 million in cash and no debt.
Growth is driven by SoundHound’s OASYS agentic AI platform and enterprise wins including eight-figure multi-year Latin America contract spanning 20+ countries, seven-figure China automotive infotainment agreement, and seven-figure healthcare deal. Automotive partners Stellantis (NYSE:STLA) and Hyundai expanded live generative AI deployments.
CEO Keyvan Mohajer stated, “Our exceptional Q2 results demonstrate the momentum SoundHound is building… With our Q2 revenue now 10 times what it was when we debuted as a public company in Q2 2022, and enterprise demand for high-ROI voice and agentic AI accelerating globally, our OASYS platform and in-house model innovations position us to lead in the new era of enterprise automation.” The pending acquisition of LivePerson is expected to close before the end of 2026.
SoundHound stock had entered earnings down 36% year to date (YTD). Reddit chatter turned very bullish with a sentiment score of 82 ahead of the release.
Unity Beat and Raise Powers a Rebound Unity reported Q2 revenue of $546 million, up 24% YoY, beating $514.6 million above consensus. Adjusted EBITDA came in at $160 million at a 29% margin, up from $90 million and a 21% margin versus a year ago. Moreover, the company’s free cash flow reached $202 million.
Unity’s Q3 2026 strategic revenue guidance of $540 million to $550 million landed above the consensus estimate, with the midpoint implying 44% to 47% YoY growth. The Grow Solutions segment, home to the Unity Vector AI ad platform, grew 35% YoY to $389 million and is driving results.
CEO Matt Bromberg called it “arguably the best quarter in Unity’s history as a public company.” Unity stock had climbed 20% over the past month, and management now expects to reach GAAP profitability by Q3 2026.
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Unity also plans to retire its 2021 convertible notes in November 2026, cleaning up the balance sheet as Vector AI ramps translate into operating leverage.
Datadog Sells Off Despite Its Own Beat and Raise Meanwhile, Datadog delivered a beat and raise. Q2 revenue of $1.12 billion beat the $1.08 billion consensus estimate and grew 35.6% YoY. Also, non-GAAP EPS of $0.65 topped the $0.58 estimate, marking the fifth straight quarterly EPS beat.
Datadog’s $100,000-plus ARR customer count grew to 4,720, up from 3,850 versus a year ago. Management raised full-year 2026 revenue guidance to $4.45 billion to $4.47 billion and non-GAAP EPS to $2.50 to $2.54. Plus, Datadog’s free cash flow margin expanded to 25% from 20% from a year ago.
CEO Olivier Pomel provided a confident assessment:
Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow. Our customers are building and deploying with AI, and they are using the Datadog platform to observe, secure, and act on their AI-enabled solutions.
The issue was expectations. Datadog stock had rallied 108% YTD and hit an intraday record above $292 the prior session. Today’s move is on track to be one of DDOG stock’s largest single-day drops on record.
What to Watch Now SoundHound holds its earnings call at 5:00 p.m. ET tonight, where the OASYS pipeline and LivePerson integration timeline could shape the next share-price move. Unity’s call was held earlier this morning at 8:30 a.m. ET, and investors can watch for whether Vector AI momentum continues translating into upside guidance and free cash flow.
For Datadog, the debate centers on multiple compression rather than business execution. The bull case rests on 35.6% growth, AI observability leadership through Bits AI and AI Guard, and expanding free cash flow margins. The bear case is a stock that ran too far, too fast into the report, with prediction sentiment turning bearish at a composite score of 36.6.
Investors can watch for whether today’s flush finds a floor before Datadog’s next major catalyst. Position sizing across all three names should reflect the volatility on display, with new exposure warranted only after the price action stabilizes.
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Second quarter revenue grew 36% year-over-year to $1.12 billion Robust growth of larger customers, with about 4,720 $100k+ ARR customers, up from about 3,850 a year ago Launched AI-powered Bits Code, Bits Chat, and Bits Agent Builder for general availability NEW YORK, Aug. 06, 2026 (GLOBE NEWSWIRE) -- Datadog, Inc. (NASDAQ:DDOG), the leading AI-powered observability and security platform, today announced financial results for its second quarter ended June 30, 2026. "Datadog delivered a strong quarter, with 36% year-over-year revenue growth, $316 million in operating cash flow, and $279 million in free cash flow," said Olivier Pomel, co-founder and CEO of Datadog.
Datadog, Inc. (NASDAQ:DDOG) will release its second quarter earnings report before the opening bell on Thursday, Aug. 6.
Analysts expect the New York-based company to report quarterly earnings of 58 cents per share, up from 46 cents per share in the year-ago period. The consensus estimate for Datadog’s quarterly revenue is $1.08 billion. It reported $826.76 million last year, according to Benzinga Pro.
On June 30, Datadog announced it has acquired Adaptive ML.
Shares of Datadog fell 1.7% to close at $283.17 on Wednesday.
Benzinga readers can access the latest analyst ratings on the Analyst Stock Ratings page. Readers can sort by stock ticker, company name, analyst firm, rating change or other variables.
Let’s have a look at how Benzinga’s most-accurate analysts have rated the company in the recent period.
Considering buying DDOG stock? Here’s what analysts think:
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NEW YORK, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Datadog, Inc. (NASDAQ:DDOG), the leading AI-powered observability and security platform, today announced that management will present at the following investor conferences:
Canaccord Genuity’s 46th Annual Growth Conference. The presentation is scheduled for Wednesday, August 12, 2026, at 3:30 p.m. ET.The Citi Global TMT Conference. The presentation is scheduled for Tuesday, September 8, 2026 at 11:30 a.m. ET.The Goldman Sachs Communacopia & Technology Conference. The presentation is scheduled for Thursday, September 10, 2026, at 12:30 p.m. ET / 9:30 a.m. PT.
The presentations will be webcast live, and replays of each presentation will be available for a limited time under the “Events and Presentations” section of the Company’s investor relations website at https://investors.datadoghq.com/.
About Datadog
Datadog is the leading observability and security platform for the AI era, providing businesses with unified visibility across the technology stack to manage complexity at scale. It brings applications, infrastructure, data, models, and security into one place, using AI to detect and resolve issues before they impact customers. Trusted globally by Fortune 500 companies and high-growth AI leaders, Datadog enables businesses to move faster with clarity and confidence.
Wall Street analysts forecast that Datadog (DDOG - Free Report) will report quarterly earnings of $0.58 per share in its upcoming release, pointing to a year-over-year increase of 26.1%. It is anticipated that revenues will amount to $1.08 billion, exhibiting an increase of 30.6% compared to the year-ago quarter.
Over the last 30 days, there has been an upward revision of 0.7% in the consensus EPS estimate for the quarter, leading to its current level. This signifies the covering analysts' collective reconsideration of their initial forecasts over the course of this timeframe.
Ahead of a company's earnings disclosure, it is crucial to give due consideration to changes in earnings estimates. These revisions serve as a noteworthy factor in predicting potential investor reactions to the stock. Numerous empirical studies consistently demonstrate a strong relationship between trends in earnings estimate revision and the short-term price performance of a stock.
While it's common for investors to rely on consensus earnings and revenue estimates for assessing how the business may have performed during the quarter, exploring analysts' forecasts for key metrics can yield valuable insights.
Given this perspective, it's time to examine the average forecasts of specific Datadog metrics that are routinely monitored and predicted by Wall Street analysts.
It is projected by analysts that the 'Remaining Performance Obligations' will reach $3.60 billion. Compared to the current estimate, the company reported $2.43 billion in the same quarter of the previous year.
The average prediction of analysts places 'Customers' at 34,060 . Compared to the current estimate, the company reported 31,400 in the same quarter of the previous year.
According to the collective judgment of analysts, 'Customers >$100k in ARR' should come in at 4,633 . The estimate compares to the year-ago value of 3,850 .
View all Key Company Metrics for Datadog here>>>
Over the past month, shares of Datadog have returned +2.9% versus the Zacks S&P 500 composite's +0.2% change. Currently, DDOG carries a Zacks Rank #2 (Buy), suggesting that it may outperform. the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
