Datadog, Inc. provides an observability and security platform for cloud applications, operating in the United States and internationally. Its products cover infrastructure and application performance monitoring, log management, observability pipelines, synthetics, real user monitoring, product analytics, continuous profiler, database monitoring, data observability, LLM observability, error tracking, network monitoring, incident response, workflow automation and App builder, event management, bits AI SRE, cloud cost management, cloud security, code security, cloud SIEM, threat management, sensitive data scanner, and CI visibility. The company was incorporated in 2010 and is headquartered in New York, New York.
Datadog's strong demand and AI acquisition offset rising competition
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Record Q1 revenue and customer growth Datadog reported Q1 revenue of $1.01 billion, up 32.2% year over year and beating estimates by 4.9%. It added 240 large enterprise customers, bringing the total to 4,550. This shows strong demand for its monitoring tools, which supports a higher stock price.
This is a new earnings report that directly shows Datadog's financial strength and growth.
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Backlog surges 51% to $3.48 billion Remaining performance obligations, a measure of future contracted revenue, jumped 51% to $3.48 billion. This was driven by more multi-year deals and record new customer signings. A growing backlog gives confidence in future revenue and can push the stock up.
This forward-looking metric signals accelerating demand and is new information from the latest quarter.
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Multi-product adoption and raised guidance More customers are using multiple Datadog products: 56% use four or more, up from 51% a year ago. Annual recurring revenue passed $4 billion, and the company raised its 2026 revenue guidance to $4.30–$4.34 billion, implying 25–27% growth. This shows the strategy is working and supports a higher valuation.
This new update on product adoption and guidance directly affects growth expectations and stock price.
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AI acquisition and rising competition Datadog acquired AI startup Adaptive ML, which could enhance its AI monitoring capabilities and lifted the stock over 2%. However, Elastic launched new observability features with automated migration tools from Datadog, directly targeting its customers. This competitive threat could pressure future growth and the stock price.
These are new events that show both a positive strategic move and a negative competitive development.
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Datadog's AI-era demand broadens as big customers spend more
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Customers stack more Datadog products More customers are buying several Datadog tools at once: 58% now use at least four products, up from 52% a year ago, and a media company signed a deal worth over $30 million. Selling more to each customer lifts revenue without needing as many new customers.
Shows the demand engine behind Datadog's growth, a core reason the stock can keep rising.
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AI-agent monitoring starts making money Datadog says thousands of customers now pay for tools that watch AI agents, a brand-new market it is racing Dynatrace to own. If AI creates more software activity to monitor, that expands Datadog's long-term sales opportunity.
A new growth market is the biggest long-term driver of whether Datadog's revenue keeps compounding.
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Big enterprise deals and profits both grow New large-customer bookings more than doubled, customers spending $100,000+ a year rose 23% to about 4,720, and over 750 AI-native firms now use Datadog. Revenue grew 36% to $1.12 billion, with free cash flow up to $279 million from $165 million.
Confirms Datadog is winning bigger contracts while also becoming more profitable, which supports the share price.
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One giant customer cut usage, guidance absorbs it Datadog's single largest customer reduced how much it uses, which hurt the quarter and was the main reason the stock fell despite beating forecasts. Management says the cut is fully baked into guidance, so the risk is known but not gone.
The main counterweight to the growth story and the reason a strong quarter still disappointed investors.
Q3 2026
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Datadog Q2 beat but largest customer cut usage, slowing growth
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Q2 revenue up 36% with raised outlook Datadog's Q2 revenue rose 36% to $1.12 billion, with a raised full-year outlook, 23% operating margin, and free cash flow up to $279 million. This shows the business is still growing fast and generating cash.
It highlights the strong fundamental performance that supported the stock during the quarter.
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Customers bundle more products and AI monitoring monetizes More customers are bundling Datadog products: 58% now use four or more, up from 56% last quarter. Large deals doubled, and AI-agent monitoring is starting to bring in revenue. This shows the strategy is working.
It shows progress in selling more to existing customers and new AI products, a key growth driver.
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Largest customer cut usage, causing sell-off Datadog's largest customer reduced its usage, which was the main cause of a sharp stock sell-off. Management says the impact is fully baked into guidance, but it highlights the risk of relying on a few big customers.
It was the most notable negative event that drove the stock down during the quarter.
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Downgrade and slowing growth expectations Bernstein downgraded the stock on fears that growth has peaked. Q3 guidance implied just 1.8% sequential growth, adjusted gross margin slightly missed consensus, and spending intentions weakened. These factors weighed on the stock.
It captures the analyst downgrade and slowing momentum that pressured the stock.
News & notes movingDDOG
United States
Artificial Intelligence▲
Datadog Tops 750 AI Customers as Non-AI Growth Accelerates
Datadog's platform is expanding its reach as companies adopt AI, with more than 750 AI-focused customers using the service in the second quarter. Revenue growth among Datadog's broader customer base, excluding AI customers, accelerated to the high-20% range in the second quarter, up from 18% a year earlier, while management said MCP tool calls from AI agents increased more than 22-fold from the end of 2025. The company now offers more than 20 products, and about 85% of customers were using at least two products by June, with 37% using six or more; one large media customer signed a multiyear deal worth more than $30 million after replacing four commercial and internal tools and using 19 Datadog products. Datadog shares were trading at roughly 84.8x forward earnings after surging more than 75% since May, and analysts expect adjusted EPS to grow about 23% in 2026. Hedge fund holdings in the stock rose from 80 at the end of Q1 to 92 at the end of Q2 2026, with position value climbing from about $2.54 billion to $3.94 billion.
Artificial Intelligence › AI Tooling, Data & MLOps ▲Demand
Artificial Intelligence › Agentic AI & Autonomous Workflows ▲Demand
DDOG · Demand · Positive Datadog topped 750 AI-focused customers and non-AI revenue growth accelerated to high-20% range, with a large media customer signing a multiyear deal worth over $30 million.
Cisco Systems reported double-digit order growth across its entire security portfolio, including Splunk, in the fourth quarter of fiscal 2026, with Security revenues rising 14% year over year to $2.23 billion. More than 1,500 customers bought newer offerings such as Secure Access, XDR, Hypershield and AI Defense in the quarter, lifting total net new customers since launch to more than 6,400, while firewall orders climbed more than 30% year over year. Observability revenues, a smaller part of the business, increased 6% to $275 million in the quarter, and for the full fiscal 2026 Security revenues grew 2% to $8.23 billion while Observability revenues rose 4% to $1.10 billion. Cisco also said nearly 4,500 enterprises signed up for Cisco Cloud Control and more than 8,600 customers use Resilient Infrastructure Services powered by Cisco IQ, and it launched Antares, a family of open-weight small language models for identifying known code vulnerabilities. The company faces intensifying competition from Datadog, which has more than 750 AI customers, and CrowdStrike, whose Falcon Flex annual recurring revenue surpassed $2.29 billion, up 101% year over year. Cisco shares have appreciated 38.5% year to date, and the Zacks Consensus Estimate for earnings stands at $1.32 per share, implying 32% growth.
Cybersecurity & Digital Trust › Cloud & Workload Security ▲Demand
CSCO · Demand · Positive Cisco reported double-digit security order growth, 14% Security revenue growth to $2.23B, and firewall orders up over 30% year over year.
Splunk Inc. · Demand · Positive Splunk is included in Cisco's double-digit order growth across its entire security portfolio in Q4 fiscal 2026.
CRWD · Competition · Negative CrowdStrike is named as an intensifying competitor, with Falcon Flex ARR surpassing $2.29B, up 101% year over year.
DDOG · Competition · Negative Datadog is cited as an intensifying competitor with more than 750 AI customers.
Datadog International Business Hits 27% of Revenue as Full-Year Guidance Set at $4.45-$4.47 Billion
Datadog is accelerating its international expansion across EMEA and APAC, with international markets contributing about 27% of total revenues in the first six months of 2026. The company maintains sales operations in Amsterdam, Dublin, London, Paris, Seoul, Singapore, Sydney, and Tokyo, and says it is seeing growth acceleration across regions with particularly strong execution in LatAm. Management expects full-year 2026 revenues of $4.45-$4.47 billion, representing 30% year-over-year growth, though the company cautions that expansion efforts may hurt near-term operating results and carries risks from slower cloud adoption, regulatory and privacy rules, higher compliance costs, and currency fluctuations. Rivals are also widening their reach: Dynatrace posted a strong EMEA rebound in first-quarter fiscal 2027 and an eight-figure new-logo win from one of Latin America's largest financial institutions, while Cisco reported fiscal fourth-quarter product-order growth of 44% in the Americas, 25% in EMEA, and 19% in APJC. Datadog shares have surged 89% year to date, outpacing the broader Zacks Computer and Technology sector's 21.8% return, and trade at a trailing 12-month price-to-sales ratio of 24.03 versus the Internet – Software industry average of 5.88. The Zacks Consensus Estimate for Datadog's 2026 earnings stands at $2.52 per share, unchanged over the past 30 days but up 4.56% over the past 60 days, compared with $2.05 per share reported in 2025.
Palantir Commercial Revenue Jumps 110% to $945 Million in Q2 2026
Palantir Technologies' commercial revenue surged 110% to $945 million in the second quarter of 2026, more than doubling the $451 million recorded a year earlier. The commercial segment added $494 million year over year, expanding by more than its entire year-earlier base, while government revenue rose 79% to $990 million from $553 million. Combined, the two businesses generated $1.94 billion in second-quarter 2026 revenue, up from roughly $1 billion a year earlier, with commercial operations contributing more than half of the combined year-over-year increase and narrowing the gap with government revenue to just $45 million. Among peers, C3.ai reported fiscal fourth-quarter 2026 revenue of $51.6 million, down substantially year over year, and forecast fiscal 2027 revenue of $210-$240 million, while Datadog's second-quarter 2026 revenue rose 36% to $1.12 billion, with customers contributing at least $100,000 in ARR up 23% to roughly 4,720 and free cash flow of $279 million. Palantir shares have gained 37% over the past three months against 19% industry growth, and the stock trades at a forward price-to-sales ratio of 39.96X versus an industry average of 4.2X, carrying a Value Score of F and a Zacks Rank #1 (Strong Buy).
Artificial Intelligence › Agentic AI & Autonomous Workflows ▲Demand
Artificial Intelligence › AI Applications & Copilots Competition
PLTR · Demand · Positive Palantir's commercial revenue surged 110% to $945 million and government revenue rose 79%, driving total Q2 2026 revenue to $1.94 billion.
AI · Demand · Negative C3.ai reported fiscal Q4 2026 revenue of $51.6 million, down substantially year over year, with weak fiscal 2027 guidance.
DDOG · Demand · Positive Datadog's Q2 2026 revenue rose 36% to $1.12 billion with customers at $100,000+ ARR up 23%.
Datadog Enterprise Bookings Double as $100,000-Plus Customers Reach 4,720
Datadog's enterprise new logo annualized bookings more than doubled year over year in the second quarter of 2026, with customers generating $100,000 or more in annual recurring revenue climbing to about 4,720, a 23% increase from roughly 3,850 a year prior, while total customer count rose to approximately 33,400 from 31,400. Over 750 AI-native customers now rely on Datadog, and all 10 of the largest AI companies are counted among its customers, with MCP tool calls quadrupling quarter over quarter. The momentum builds on a quarter in which revenues grew 36% year over year to $1.12 billion, non-GAAP operating margin reached 23% from 20%, free cash flow rose to $279 million from $165 million, and remaining performance obligations reached $3.47 billion, up 43%. Third-quarter revenue guidance of $1.135 billion to $1.145 billion and a full-year range of $4.45 billion to $4.47 billion embed a previously flagged usage reduction from its single largest customer, while full-year non-GAAP operating income guidance of $1.01 billion to $1.03 billion points to continued margin discipline against elevated GAAP operating expense growth tied partly to the Adaptive ML acquisition. Rivals Dynatrace and Elastic are reporting comparable enterprise expansion, with Dynatrace posting record new-logo annual recurring revenue growth of more than 160% and total ARR of $2.14 billion, up 17%, and Elastic growing its $100,000-plus ACV customer cohort past 1,800 accounts alongside 27% remaining performance obligation growth. Datadog shares have surged 74.7% year to date, and the Zacks Consensus Estimate for 2026 earnings stands at $2.52 per share.
Cloud & Digital Infrastructure › Observability & DevOps ▲Demand
Artificial Intelligence › AI Tooling, Data & MLOps ▲Demand
DDOG · Capital · Positive Q2 revenue grew 36% to $1.12B, non-GAAP operating margin rose to 23%, FCF climbed to $279M, and RPO reached $3.47B.
DDOG · Demand · Positive Enterprise new-logo annualized bookings more than doubled and $100k+ ARR customers rose 23% to ~4,720, with 750+ AI-native customers.
DT · Demand · Positive Dynatrace posted record new-logo ARR growth of more than 160% and total ARR of $2.14B, up 17%, as a rival reporting comparable enterprise expansion.
ESTC · Demand · Positive Elastic grew its $100,000-plus ACV customer cohort past 1,800 accounts alongside 27% RPO growth, cited as a rival with comparable enterprise expansion.
Cisco's Splunk Push Adds AI Security Tools as Rivals CrowdStrike and Datadog Close In
Cisco Systems is expanding its Splunk portfolio with new artificial intelligence security and observability capabilities after the unit posted double-digit order growth in the fourth quarter of fiscal 2026. Splunk contributed to several whole-portfolio agreements, added more than 280 customer logos and notched its highest number of competitive wins in any quarter of fiscal 2026, pushing Cisco past its full-year target of adding 1,000 Splunk customer logos. The enhancements include Cisco AI POD for Splunk, expanded AI-agent observability, Tokenomics capabilities and stronger agentic security operations, aimed at helping enterprises deploy, secure and monitor agentic AI at scale. More than 1,500 customers bought newer Cisco security products such as Secure Access, XDR, Hypershield and AI Defense in the fiscal fourth quarter, while the acquisitions of Galileo Technologies and Astrix Securities broaden Cisco's observability and security reach. The push puts Cisco up against Datadog, whose AI offerings include Agent Observability, Agent Console, Data Observability, GPU Monitoring and AI Guard, and CrowdStrike, whose Next-Gen SIEM ending ARR surpassed $695 million and whose Falcon Shield ARR surged more than 185% year over year in the second quarter of fiscal 2027. Cisco shares have appreciated 42.9% year to date, and the Zacks Consensus Estimate for earnings stands at $1.32 per share, implying 32% growth.
Datadog and Dynatrace Race to Own AI-Agent Observability Market
Datadog and Dynatrace are racing to own the emerging market for AI-agent observability, as AI coding agents threaten to generate more software changes and production failures to monitor. Datadog told the Goldman Sachs Communacopia + Technology Conference on September 10 that monetization of AI-agent observability has begun, with thousands of customers using the capability, describing an emerging inference economy in which more AI applications and agents mean more activity to monitor. One day later, Dynatrace launched a verified Cursor Marketplace plugin that gives coding agents access to live production context through MCP and 30 Dynatrace skills. Datadog's second-quarter revenue rose 36% to $1.12 billion, and customers generating at least $100,000 of annual recurring revenue increased 23% to roughly 4,720, while Dynatrace's latest quarterly ARR grew 17% to $2.136 billion and annualized log-consumption reached $200 million after almost doubling over the previous two quarters. Dynatrace also faces execution and integration risk from its planned $915 million Arize acquisition, and the deciding question is whether autonomous agents prevent enough problems to reduce monitoring or create enough software activity to make observability a larger machine-to-machine market.
Artificial Intelligence › AI Tooling, Data & MLOps ▲Demand
Cloud & Digital Infrastructure › Observability & DevOps ▲Demand
Artificial Intelligence › Agentic AI & Autonomous Workflows Technology
DDOG · Demand · Positive Datadog says AI-agent observability monetization has begun with thousands of customers using it, and Q2 revenue rose 36% to $1.12B with large-customer ARR up 23%.
DT · Technology · Positive Dynatrace launched a verified Cursor Marketplace plugin giving coding agents live production context via MCP and 30 Dynatrace skills, advancing its AI-agent observability offering.
DT · Capital · Negative Dynatrace faces execution and integration risk from its planned $915 million Arize acquisition.
Arize · Capital · Negative Arize is referenced only as Dynatrace's planned $915 million acquisition carrying execution and integration risk.
Cursor · Competition · Neutral Cursor is only mentioned as the marketplace where Dynatrace launched its plugin, not as a subject with its own impact.
Enterprise Software Stocks Surge on AI-Driven Earnings
Enterprise software and SaaS stocks surged in afternoon trading after quarterly earnings and upbeat commentary signaled that artificial intelligence is driving growth across the sector rather than threatening legacy business models. The rally, highlighted by a 20% jump in Salesforce, eased fears that AI would disrupt traditional platforms, with reports showing AI-powered offerings like Salesforce's Agentforce reaching $1.5 billion in annual recurring revenue and Slackbot surpassing 1 million active users within five months. CrowdStrike CEO George Kurtz attributed momentum to AI expanding the attack surface, while Okta's AI identity offerings drove about 30% of new bookings and increased contract values by roughly 40%. Among the gainers, Paylocity rose 4%, MongoDB jumped 9.7%, Datadog climbed 6.4%, Five9 advanced 6.4%, and monday.com gained 6.6%. MongoDB, trading near its 52-week high of $472.29, is up 12% year-to-date, though it recently dropped 4.6% on concerns over AI competition following reports that Anthropic's upcoming IPO could rival SpaceX's $75 billion debut.
Palo Alto CEO Held Talks with Okta and Datadog Before CyberArk Deal
Palo Alto Networks CEO Nikesh Arora held acquisition talks with both Okta and Datadog before landing a $25 billion deal for CyberArk, and is now circling Cribl and ClickHouse as his next targets, The Information reported on Wednesday. Between late 2024 and early 2025, Arora met with Okta CEO Todd McKinnon, and discussions progressed to product complementarity but stalled over price disagreements. Okta, valued at roughly $13.5 billion at the start of last year, has since climbed around 30% to a market cap near $23 billion. In spring 2025, Arora approached Datadog CEO Olivier Pomel with a hypothetical acquisition when Datadog was valued at more than $40 billion, but Pomel was not receptive and no formal offer was made; Datadog's market cap has since roughly doubled to more than $80 billion. With both paths closed, Arora executed fallback moves: Palo Alto agreed in July 2025 to acquire CyberArk, and in January 2026 paid $3.35 billion for Chronosphere, a smaller Datadog rival. Together, those two acquisitions contributed $338 million of the $3 billion in revenue Palo Alto generated in the April quarter. Arora's accelerating dealmaking reflects a conviction that AI is fundamentally changing the threat landscape, with AI agents capable of executing cyberattacks humans never could, making continuous monitoring a boardroom priority.
Datadog's multi-product strategy is gaining traction, with 58% of customers using at least four products as of June 30, 2026, up from 52% a year earlier. The share using six or more rose to 37% from 29%, and those using 10 or more nearly doubled to 13% from 7%. 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. Real User Monitoring surpassed $200 million in annual recurring revenue and grew more than 50% year over year. The Zacks Consensus Estimate projects year-over-year total revenue growth of 28.9% in 2026.
Vertosoft Partners With Datadog to Deliver Monitoring Solutions to Government
Vertosoft announced a strategic partnership with Datadog to bring the AI-powered observability and security platform to U.S. government agencies. Datadog for Government is now FedRAMP High certified, enabling deployment for highly sensitive federal workloads. The partnership combines Vertosoft's public sector distribution network with Datadog's unified monitoring across infrastructure, applications, and hybrid cloud environments. Vertosoft President Jay Colavita said the collaboration will help agencies procure Datadog solutions faster and strengthen digital operations, while Datadog's AVP of US Public Sector Eamon McCormick highlighted the company's certification for sensitive government environments.
Datadog's Q2 results beat Wall Street expectations but triggered a significant negative market reaction, with leadership citing continued acceleration in AI-native and traditional customer segments. Revenue reached $1.12 billion, up 35.6% year over year and 3.9% above analyst estimates, while adjusted EPS of $0.65 beat by 11.4%. The company raised full-year revenue guidance to $4.46 billion at the midpoint from $4.32 billion, a 3.2% increase, and lifted adjusted EPS guidance to $2.52, a 5% increase. Management acknowledged that a usage reduction by its largest customer impacted the quarter and was fully derisked in guidance. Analyst questions focused on the largest customer's contract renewal, AI inference observability needs, CFO concerns about rising observability costs, new logo ramp, and Bits AI's role in security automation.
Nvidia-Backed Startup CodeRabbit Valued at $1.5 Billion in Funding Round
CodeRabbit Inc., an AI-powered code review service, has raised $143 million in a new funding round that values the startup at $1.5 billion. The round was co-led by Atomico and Smash Capital, with participation from BMW i Ventures and Datadog Inc., bringing total funding to more than $200 million. Existing backers include Nvidia Corp. The company, founded in 2023, serves approximately 17,000 customers and conducts over 2 million code reviews each week. CodeRabbit plans to use the funding to double its European headcount and expand into Asia, focusing on Japan and Singapore, while also introducing new security vulnerability detection features.
Datadog shares fall 19% despite strong second quarter as guidance signals slowdown
Datadog shares dropped 19% after the company reported second-quarter revenue of $1.12 billion, up 36% year-over-year and above its own forecast, while raising full-year revenue guidance to between $4.45 billion and $4.47 billion. The sell-off was driven by third-quarter revenue guidance of $1.135 billion to $1.145 billion, implying about 29% growth, a sharp deceleration from the 36% just delivered, partly because its largest customer began reducing usage. Adjusted earnings per share were 65 cents, beating the 57-to-59-cent range, and the company lifted its full-year adjusted earnings outlook to $2.50 to $2.54 per share. The stock traded near $229, about 91 times this year's expected adjusted earnings, leaving little room for error as growth slows. Separately, Datadog launched its platform on the AWS Europe (London) Region on July 16, giving UK customers a local option for storing observability and security data.
Sands Capital Flags Governance Concerns Over Datadog’s Proposed Nevada Reincorporation
Sands Capital’s Technology Innovators Fund disclosed it has engaged with Datadog over the company’s proposal to reincorporate from Delaware to Nevada, citing potential implications for shareholder rights and board oversight. The fund noted that a change in domicile may affect litigation standards, fiduciary duties, and the balance between management protections and investor oversight, and it expects more companies to submit similar proposals. The engagement was highlighted in the fund’s second-quarter 2026 investor letter, during which the fund returned 26.9% net, benefiting from strong gains across memory, software infrastructure, cybersecurity, and other AI-related holdings. Datadog shares closed at $233.93 on August 7, 2026, with a one-month return of negative 4.29% and a 52-week gain of 93.33%, giving it a market capitalization of $89.44 billion.
Datadog Q2 revenue beats but shares fall on largest customer usage cut
Datadog reported second-quarter 2026 revenue of $1.12 billion, up 35.6% year on year and above market expectations, while non-GAAP earnings per share of $0.65 beat consensus by 11.4%. The company issued next-quarter revenue guidance of $1.14 billion at the midpoint, 2.9% ahead of analyst estimates, and raised its full-year outlook. Despite the beats, shares fell sharply after management disclosed that a usage reduction by its largest customer weighed on the quarter and was factored into the forecast. CEO Olivier Pomel highlighted accelerating growth among both AI-native and traditional customers, with over 750 AI customers now on the platform, while CFO David Obstler said guidance reflects a conservative approach following a recent renewal with that top customer at lower usage levels.
Stocks Waver as Mixed Earnings and Chipmaker Rebound Offset Software Weakness
U.S. stocks were mixed on Thursday as a rebound in chipmakers and stronger-than-expected economic data helped offset a sell-off in software shares following disappointing earnings. The S&P 500 edged up 0.07%, the Dow fell 0.38%, and the Nasdaq 100 added 0.26%. Datadog tumbled over 14% after reporting second-quarter adjusted gross margin below consensus, dragging down other software names including Salesforce, Atlassian, and Workday. AppLovin sank 19% on a revenue miss, while memory chipmakers Western Digital and SanDisk fell sharply after SanDisk forecast first-quarter revenue of $10.30 billion to $10.80 billion, below the $11.16 billion consensus. Limiting losses, ARM Holdings rose more than 5% and ASML, ON Semiconductor, and Marvel Technology gained over 2%, while Paycom Software surged 22% after raising its full-year revenue outlook to $2.20 billion to $2.21 billion, above estimates. Weekly jobless claims rose by 1,000 to 199,000, better than the 205,000 expected, and second-quarter nonfarm productivity increased 1.4%, exceeding the 0.6% forecast. A Financial Times report that Fed Chair Warsh is willing to raise rates in September if inflation firms weighed on sentiment, while crude oil rose over 1% after Yemen's Houthi rebels said they targeted a Saudi oil tanker in the Gulf of Aden.
Software and Tech Weakness Pressures Stocks Despite Positive Economic Data
U.S. stock indices are mixed as weakness in software and technology stocks offsets positive economic data and strong earnings from some companies. The S&P 500 is up 0.17%, the Dow is down 0.03%, and the Nasdaq 100 is down 0.30%. Datadog plunged 15% after reporting Q2 adjusted gross margin below consensus, while AppLovin fell 19% on a revenue miss. Memory chipmakers declined after SanDisk forecast weaker-than-expected Q1 revenue. Gains were supported by better-than-expected weekly jobless claims, Q2 nonfarm productivity, and unit labor costs, along with strong results from Motorola Solutions, IonQ, Paycom Software, Ormat, and Parker-Hannifin. A Financial Times report that Fed Chair Warsh is willing to raise rates in September if inflation firms added pressure.
Software stocks sink as Datadog, Figma, HubSpot plunge over 15%
Software stocks declined sharply on Thursday, led by drops of more than 15% in Datadog, Figma, and HubSpot following their quarterly results. Datadog beat top- and bottom-line estimates but posted an adjusted gross margin of 80%, slightly below the 80.7% consensus. Figma also beat estimates but flagged rising AI inference spending, with its CFO noting the company bears the cost of inference for beta products without offsetting revenue, causing near-term gross margin variability. The iShares Expanded Tech-Software Sector ETF fell more than 2%, and while the sector has rebounded over 35% from its April low, it remains down 3% year to date.
SoundHound AI Rallies 12%, Unity Software Rises 11%, Datadog Sinks 15% as Traders Separate Software Winners From Losers
SoundHound AI rallied 12%, Unity Software rose 11%, and Datadog sank 15% on Thursday as traders separated software winners from losers following earnings results. SoundHound surged after posting second-quarter revenue of $61.9 million, beating the $52.4 million consensus estimate, and raising full-year 2026 revenue guidance to $230 million to $260 million. Unity jumped after reporting second-quarter revenue of $546 million, up 24% year-over-year and above the $514.6 million consensus, with CEO Matt Bromberg calling it arguably the best quarter in Unity's history as a public company. Datadog dropped despite beating estimates with second-quarter revenue of $1.12 billion and non-GAAP earnings per share of $0.65, as its 108% year-to-date gains created valuation pressure. The Invesco QQQ Trust was roughly flat on the day, highlighting the stock-specific moves.
Datadog Revenue Grew Over 30% Year-Over-Year in Q1, Exceeding Expectations
Datadog's revenue grew more than 30% year-over-year in the first quarter, exceeding market expectations, according to Janus Henderson's Forty Fund second-quarter 2026 investor letter. The fund highlighted Datadog as a top performer in the information technology sector, benefiting from increased AI-related spending. Datadog provides observability and infrastructure monitoring solutions that help AI and cloud-based applications run more efficiently, and demand has continued to grow as more AI workflows move onto the cloud. The company also raised guidance, signaling the potential for continued business acceleration.
Datadog Jumped 7.7% After Analysts Raised Price Targets, but AI-Native Clients Are the Real Growth Engine
Datadog shares climbed 7.7% after Morgan Stanley, BTIG, and Citi raised their price targets to as high as $300, reflecting increases of 11% to 33% while maintaining bullish ratings. The company posted first-quarter revenue above $1 billion, up 32% year-over-year, with annualized revenue run-rate exceeding $4 billion and a 21% rise in customers spending at least $100,000 annually to roughly 4,550. Non-AI-native customers grew in the mid-20s percent range, meaning the remaining growth is largely driven by AI clients, including five AI-native customers that now contribute over $10 million in annual recurring revenue. Datadog is trading at approximately 106 times forward earnings and 25 times sales, with risks centered on concentration among a small group of AI labs and the consumption-based nature of AI-native spending. The upcoming August 6 earnings report will be critical for assessing whether the AI-native cohort continues to widen the growth gap.
Datadog Rose on Accelerating Growth and AI-Driven Demand
Carillon Eagle Mid Cap Growth Fund highlighted Datadog in its second-quarter 2026 investor letter, noting that the company reported quarterly earnings above expectations with broad-based, accelerating year-over-year revenue growth. The fund stated that growth was driven by traditional use cases and new workload monitoring tied to artificial intelligence, positioning Datadog as a beneficiary of AI adoption. Strong new customer activity, existing customer expansion, and usage trends led to forward guidance that also exceeded expectations. Datadog shares closed at $268.56 on July 30, 2026, with a one-month return of 2.58% and a 52-week gain of 96.96%, giving the company a market capitalization of $95.6 billion.
Datadog Partners With Cloudaware to List LogSight on Its Marketplace
Datadog has partnered with Cloudaware to list Cloudaware LogSight on the Datadog Marketplace, aiming to give clients wider cloud log coverage and stronger visibility across multi-cloud environments. The integration focuses on automated discovery and onboarding of previously unmonitored log sources to support monitoring and compliance needs. Datadog’s stock has shown strong recent momentum, trading at $268.56, up 9.9% over the past week and 100.8% year to date. The partnership may deepen customer reliance on Datadog as a central observability and security hub, particularly for regulated sectors needing complete log coverage across AWS, Azure, and GCP.
Datadog Stock Surges 79.7% in Six Months on Strong Recurring Revenue Growth
Datadog's stock price has surged 79.7% over the past six months to $252.65 per share, driven by robust quarterly results. The company's annual recurring revenue reached $4.23 billion in the first quarter, with year-on-year growth averaging 29.5% over the last four quarters. Analysts project revenue will rise 24.2% over the next 12 months, while Datadog's customer acquisition cost payback period stands at an efficient 14.8 months. The stock currently trades at 19.7 times forward price-to-sales.
CoreWeave Revenue Surpasses Datadog but Profitability Gap Widens
CoreWeave has overtaken Datadog in quarterly revenue, posting $2.1 billion for the first quarter of 2026 compared to Datadog's $1.0 billion, according to company filings. CoreWeave's revenue accelerated sharply from $395.4 million in the second quarter of 2024, while Datadog grew steadily from $645.3 million over the same period. Despite the top-line surge, CoreWeave reported a negative 36% net income margin and an operating loss of $144 million in the first quarter, alongside $25 billion in debt against just over $2 billion in cash. Datadog, by contrast, recorded a 5% net income margin, operating income of $7.3 million, and held $4.8 billion in cash and marketable securities against $984.5 million in debt. The diverging trends highlight how revenue growth alone does not determine investment merit, as CoreWeave's AI-infrastructure demand drives sales but leaves it deeply unprofitable.
Artificial Intelligence › AI Compute Cloud & Neoclouds ▲Demand
Cloud & Digital Infrastructure › Mega-cap Hyperscalers ▲Demand
Artificial Intelligence › AI Tooling, Data & MLOps Competition
Cloud & Digital Infrastructure › Observability & DevOps Competition
CRWV · Capital · Negative CoreWeave reported a negative 36% net income margin, operating loss of $144M, and $25B debt vs $2B cash, highlighting deep unprofitability.
DDOG · Capital · Positive Datadog's 5% net income margin, operating income of $7.3M, and strong cash position contrast favorably with CoreWeave's losses.
Datadog CTO Alexis Le-Quoc sold $11.5 million in shares under a pre-set trading plan
Datadog co-founder and CTO Alexis Le-Quoc sold 43,224 shares of Class A Common Stock on July 20, 2026, realizing approximately $11.5 million at a weighted average price of $265.23. The transaction was executed under a Rule 10b5-1 trading plan adopted on June 13, 2025, and reduced his direct holdings by 8% while leaving him with 509,805 directly held shares and an indirect interest of 169 shares via the Alexis Le-Quoc Revocable Trust. Including derivative securities, the sale represented less than 1% of his total equity exposure. Datadog shares have returned 81% over the past year, and the company recently reported first-quarter revenue of $1 billion, up 32% year-over-year, with full-year 2026 sales forecast at $4.3 billion.
U.S. stock indexes retreated as crude oil prices and bond yields climbed. The S&P 500 fell 0.13%, the Nasdaq 100 dropped 0.48%, while the Dow Jones Industrial Average edged up 0.15%. WTI crude surged more than 2% to a six-week high after the U.S. and Iran downplayed peace prospects, pushing the 10-year Treasury yield to a two-month high of 4.65%. Software and cybersecurity stocks led the decline, with ServiceNow, Workday, Datadog, and Palantir Technologies down over 3%. Markets awaited Alphabet's earnings after the close for signs of returns on its artificial intelligence investments, as it plans to more than double capital spending to as much as $190 billion this year.
Cybersecurity & Digital Trust › Cloud & Workload Security ▼Capital
GOOG · Capital · Neutral Markets awaited Alphabet's earnings after the close for signs of returns on AI investments, as it plans to more than double capital spending to $190 billion.
DDOG · · Negative Software and cybersecurity stocks led the decline, with Datadog down over 3% amid rising bond yields and oil prices.
NOW · · Negative Software and cybersecurity stocks led the decline, with ServiceNow down over 3% amid rising bond yields and oil prices.
PLTR · · Negative Software and cybersecurity stocks led the decline, with Palantir Technologies down over 3% amid rising bond yields and oil prices.
WDAY · · Negative Software and cybersecurity stocks led the decline, with Workday down over 3% amid rising bond yields and oil prices.
Datadog sales beat plan in Q2 but spending intent softens, BNP survey finds
BNP Paribas reports that Datadog-related sales trended meaningfully above plan in the second quarter, but forward-looking customer spending intentions have weakened. Most respondents in the bank's survey of 25 global software resellers said Datadog sales exceeded plan by a few percentage points, driven by product functionality, integration, and strategic alignment, with infrastructure monitoring, APM, and AI seeing the most demand. However, the spending intentions score for the next three months fell from 5.4 in April to 2.0 in July, and overall IT spend versus plan also declined. Cybersecurity remained the top category, with 76% of respondents seeing the most incremental demand, partly fueled by Anthropic's Mythos AI model, though resellers expect cybersecurity to fall behind other categories in the coming months.
Artificial Intelligence › AI Tooling, Data & MLOps Demand
Cloud & Digital Infrastructure › Observability & DevOps Demand
DDOG · Demand · Positive Datadog sales exceeded plan in Q2, driven by product functionality and integration, with strong demand for infrastructure monitoring, APM, and AI.
Software Development Stocks Surge 36.3% on Average After Strong Q1 Earnings
The 12 software development stocks tracked by this publication reported a strong first quarter, with revenues beating analysts' consensus estimates by 2.9% and next quarter's revenue guidance coming in 1.4% above expectations. Share prices have risen 36.3% on average since the latest earnings results. Twilio posted revenues of $1.41 billion, up 20% year on year and exceeding estimates by 4.7%, while Datadog achieved the biggest analyst estimate beat with revenues of $1.01 billion, up 32.2% year on year. Akamai delivered the weakest performance, with revenues of $1.07 billion, up 5.8% year on year and in line with expectations. Cloudflare recorded the fastest revenue growth in the group at 33.5% year on year, reaching $639.8 million.
Datadog CEO Olivier Pomel Sells 127,000 Shares for $32.9 Million
Datadog CEO Olivier Pomel sold approximately 127,000 shares of Class A Common Stock on July 13, 2026, realizing proceeds of about $32.9 million at a weighted average price of $259.00 per share. The transaction, executed under a Rule 10b5-1 trading plan adopted on December 15, 2025, involved the exercise and immediate sale of 127,141 fully vested stock options, resulting in a 17% reduction in Pomel’s direct equity holdings. Following the sale, Pomel retains approximately 613,000 directly held shares and around 9.0 million derivative securities, maintaining significant exposure to the company. The sale occurred after Datadog’s stock delivered an 89% one-year total return and reached all-time highs, with the company reporting its first $1 billion revenue quarter in the first quarter of 2026.
Datadog Sets August 6 for Second Quarter Fiscal 2026 Earnings Call
Datadog will report its second quarter fiscal year 2026 financial results before the U.S. markets open on Thursday, August 6, 2026. The company will host a conference call at 8:00 a.m. Eastern Time that same day to discuss the results and financial guidance. A live webcast will be available on Datadog's Investor Relations page, with a replay archived on the website.
Datadog Named a Leader in Gartner Magic Quadrant for Observability for Sixth Consecutive Year
Datadog has been recognized as a Leader in the 2026 Gartner Magic Quadrant for Observability Platforms, marking the sixth consecutive year the company has achieved this placement. Gartner highlighted Datadog's work in AI and large language model powered application monitoring as part of the recognition. The stock, trading at $264.46, has gained 13.5% over the past 30 days and 97.7% year to date, with a five-year return of 144.0%. The repeated Leader designation may reinforce perceptions of Datadog's role in AI-powered observability among customers and investors.
Artificial Intelligence › AI Tooling, Data & MLOps ▲Competition
Cloud & Digital Infrastructure › Observability & DevOps ▲Competition
DDOG · Technology · Positive Named a Leader in Gartner Magic Quadrant for Observability for sixth consecutive year, highlighting AI and LLM monitoring capabilities.
DigitalOcean and Datadog Post Eight Straight Quarters of Revenue Growth
DigitalOcean and Datadog have each recorded eight consecutive quarters of sequential revenue growth, according to company filings. DigitalOcean’s quarterly revenue rose from $192.5 million in Q2 2024 to $257.9 million in Q1 2026, while Datadog’s climbed from $645.3 million to $1.0 billion over the same period. Datadog’s Q1 2026 revenue represented a 32% year-over-year jump, and DigitalOcean expects its Q2 2026 sales growth to accelerate to 29% year over year. Both companies recently introduced new capabilities, with DigitalOcean launching an inference engine for agentic workloads and Datadog adding hardware tracking features.
Erste downgrades Broadcom, Stifel upgrades Shopify among week's notable analyst calls
Erste Group downgraded Broadcom to Hold from Buy on valuation concerns, while Stifel upgraded Shopify to Buy from Hold citing growth outlook and agentic commerce opportunity. KeyBanc downgraded Salesforce to Sector Weight, finding little evidence of momentum for Agentforce. Bernstein downgraded Datadog to Market Perform ahead of quarterly results. Wells Fargo upgraded Seagate to Overweight and raised price targets for both Seagate and Western Digital. Morgan Stanley initiated coverage of SpaceX with an Overweight rating and a $300 price target, while Goldman Sachs started with a Buy and a $205 target. Evercore ISI raised its Dell Technologies price target to $500 on AI prospects, and Citizens initiated Tesla with a Market Perform rating, noting near-term AI expectations appear ahead of reality.
AVGO · Capital · Negative Erste Group downgraded Broadcom to Hold from Buy on valuation concerns.
CRM · Capital · Negative KeyBanc downgraded Salesforce to Sector Weight, citing little evidence of momentum for Agentforce.
DDOG · Capital · Negative Bernstein downgraded Datadog to Market Perform ahead of quarterly results.
DELL · Capital · Positive Evercore ISI raised Dell Technologies price target to $500 on AI prospects.
SHOP · Capital · Positive Stifel upgraded Shopify to Buy from Hold citing growth outlook and agentic commerce opportunity.
SPCX · Capital · Positive Morgan Stanley and Goldman Sachs initiated coverage with Overweight/Buy ratings and price targets of $300 and $205 respectively.
SA analysts upgrade American Express and GM to Buy, downgrade Nvidia to Sell
Seeking Alpha analysts have upgraded American Express and General Motors to Buy while downgrading Nvidia to Sell. American Express was upgraded by Passage Research ahead of earnings, citing robust consumer spending, improving credit trends, and a $422 price target implying 21% upside. General Motors was upgraded by Bay Area Ideas, which noted a depressed valuation with a forward P/E of 5.95 despite a 30% stock rally and raised 2026 guidance. Nvidia was downgraded by The Techie, who warned that intensifying competition from Chinese firms and a shift in AI compute demand toward ASICs threaten its long-term dominance. Datadog was downgraded from Buy to Hold by Stephen Ayers, whose DCF analysis suggests the stock is overvalued by 14% even after record growth and AI wins.
Artificial Intelligence › AI Tooling, Data & MLOps Pricing
AXP · Capital · Positive Upgraded to Buy by Passage Research with $422 price target, citing robust consumer spending and improving credit trends.
DDOG · Capital · Negative Downgraded from Buy to Hold by Stephen Ayers, whose DCF analysis suggests the stock is overvalued by 14%.
GM · Capital · Positive Upgraded to Buy by Bay Area Ideas, noting depressed valuation with forward P/E of 5.95 despite rally and raised 2026 guidance.
NVDA · Competition · Negative Downgraded to Sell by The Techie, warning of intensifying competition from Chinese firms and shift in AI compute demand toward ASICs.
Zacks Picks Four Internet Stocks With Strong Upside for Second-Half 2026
Zacks Investment Research highlights Datadog, Alphabet, Shopify, and Paylocity Holding as top-ranked internet stocks with solid upside potential for the rest of 2026, driven by accelerating enterprise AI adoption. Datadog, a Zacks Rank #1 Strong Buy, guided full-year 2026 revenues of $4.30 to $4.34 billion and launched over 100 new capabilities including a fully autonomous Bits AI suite. Alphabet, a Zacks Rank #2 Buy, upsized its equity raise to $84.75 billion for AI infrastructure and guided 2026 capex at $180 to $190 billion, while Google Cloud's backlog exceeded $460 billion. Shopify, also a Zacks Rank #2 Buy, expects high-twenties revenue growth in the second quarter and raised its share repurchase authorization to $5 billion. Paylocity Holding, another Zacks Rank #2 Buy, launched Paylocity Retirement and acquired Grayscale Labs, with fourth-quarter recurring revenue growth guided at approximately 9 to 10 percent year over year.
Datadog Shares Surge 88.7% Year to Date on Accelerating Revenue Growth and AI-Driven Innovation
Datadog shares have surged 88.7% year to date, far outpacing the broader computer and technology sector's 14.8% gain and the internet software industry's 8% decline. First-quarter 2026 revenue climbed 32% year over year to $1,006 million, the company's first quarter above $1 billion, with customers generating over $100,000 in annual recurring revenue growing 21% to about 4,550. Management guided second-quarter revenue between $1.07 billion and $1.08 billion and full-year revenue between $4.30 billion and $4.34 billion, while the Zacks Consensus Estimate calls for 2026 revenue of $4.34 billion and earnings of $2.41 per share. The company also unveiled more than 100 new capabilities at its DASH 2026 conference and announced the acquisition of Adaptive ML to accelerate work on specialized AI agents. Despite a premium valuation at 19.2 times forward sales and thin GAAP margins, Datadog's accelerating growth and AI-driven innovation keep the near-term outlook favorable for growth-oriented investors.
T-Mobile and Gilead Sciences Earn Buy Upgrades, Pfizer and Datadog Cut
T-Mobile and Gilead Sciences both received Buy upgrades on Monday, with Bank of America setting a $220 target on T-Mobile and HSBC setting a $155 target on Gilead. Pfizer was downgraded to Hold from Buy at HSBC, which trimmed its target to $28 from $32, while Datadog was cut to Market Perform from Outperform at Bernstein, though its target was raised to $226 from $180. Among other notable calls, Agnico Eagle Mines was upgraded to Buy at Jefferies with a $200 target, Okta was raised to Outperform at Scotiabank with a $165 target, and Delta Air Lines was cut to Outperform from Strong Buy at Raymond James with a target lifted to $104 from $80. New initiations included ERock with Outperform ratings from Evercore ISI and JPMorgan at a $28 target, and Glaukos with a Buy rating at H.C. Wainwright and a $168 target.
Lam Research, chip stocks lead premarket gains after analyst upgrades
Lam Research, Applied Materials, and KLA Corporation led premarket gains on Monday after Morgan Stanley analysts raised their price targets on all three stocks. Lam Research jumped more than 4%, while Applied Materials and KLA each rose just under 4%. The iShares Semiconductor ETF rebounded more than 2.5% following an 11% two-day slide last week, with Intel up 2.5%, Advanced Micro Devices up 3%, and Broadcom up nearly 2%. ASML Holding gained 4% after Bernstein hiked its price target by more than 30% to $2,300, citing unprecedented AI-driven expansion in logic and DRAM capacity. T-Mobile US rose more than 1.5% after Bank of America upgraded the stock to buy from neutral, calling the recent 20% drop from February highs overdone. DataDog fell more than 2% after Bernstein downgraded it to market-perform from outperform, citing caution ahead of earnings with difficult comparisons and a potential peak in non-AI growth. Comcast edged up 0.5% after its UK-based Sky unit announced the acquisition of ITV's television business.
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