NEW YORK, May 7, 2026, 08:04 (EDT)
Datadog surged 24.4% in premarket action Thursday, changing hands at $178.75 after the cloud software firm topped first-quarter expectations and issued a notably bullish forecast for 2026. Shares had wrapped up Wednesday at $143.71, according to MarketScreener.
The response comes as software names face a tricky patch. With worries swirling that artificial intelligence might undercut demand for some subscription software—either by making it more replaceable or driving costs lower—investors have punished parts of the group. Datadog’s latest figures, though, highlight a different angle: AI is also spawning fresh demand for monitoring, security, and debugging tools.
Datadog’s observability and security software lets businesses monitor cloud app performance, spending, and security. For the quarter ended March 31, revenue climbed 32% to $1.006 billion. Non-GAAP earnings landed at 60 cents a share. CEO Olivier Pomel pointed to customers rolling out “cloud-based, AI-enabled solutions,” and noted Datadog is “using AI to build rapidly” throughout its platform. GlobeNewswire
The company bumped its 2026 revenue target higher, now looking for $4.30 billion to $4.34 billion, compared with its earlier guidance of $4.06 billion to $4.10 billion. It also boosted its adjusted earnings projection to $2.36 to $2.44 per share. Barron’s noted Datadog’s adjusted earnings surpassed the 51-cent analyst consensus, with revenue also outpacing Wall Street’s expectations.
This wasn’t a low bar to clear. Analysts had penciled in 51 cents per share and $959.94 million in revenue for the quarter, Benzinga Pro data shows, as cited by Benzinga. Datadog also brought fresh FedRAMP High certification into the release—a U.S. government cloud-security stamp that can open doors for federal contracts.
Big-ticket clients kept on growing. Datadog closed the quarter with roughly 4,550 customers generating at least $100,000 in annual recurring revenue—up 21% year-over-year. Management also pointed to GPU Monitoring, Bits AI Security Analyst, Datadog Experiments, and the MCP Server. Those offerings tie into AI infrastructure, security, and developer tools.
Analysts were warming up ahead of the report. Jefferies bumped its Datadog price target up to $170 from $160, sticking with a buy rating. Over at MarketBeat, the site showed an average “Moderate Buy” rating and a consensus price target at $177.28. MarketBeat
Recent analyst moves have leaned bullish, though signals were mixed. Gil Luria at DA Davidson stuck with a Buy and a $225 target as of May 4. Rosenblatt’s Blair Abernethy also held his Buy call, trimming his target to $178 from $185. Barclays’ Raimo Lenschow remained Overweight but revised his target lower to $148.
That optimism doesn’t come without a catch. According to a Yahoo Finance piece citing Zacks research, Datadog’s average brokerage calls line up on the buy side. But the article also flags a risk: brokerage ratings from Wall Street tend to skew overly bullish, so investors shouldn’t lean on that signal alone.
The field stays crowded. According to Gartner, Datadog is up against names like Dynatrace, Cisco Systems’ Splunk, Elastic, New Relic, and the heavyweight cloud providers—a clear signal that no single player dominates the AI and cloud monitoring landscape.
The catch: Datadog’s shares leave little margin for missteps. Simply Wall St pointed out the stock’s price-to-sales ratio sits at 14.9, well above the 3.7 average for U.S. software names. The firm also highlighted Datadog’s hefty research costs and rising threats from hyperscalers and open-source rivals—factors that could weigh on margins.
