NEW YORK, May 8, 2026, 04:12 EDT
Datadog surged Friday, catching the market’s attention as the New York-based software company lifted its 2026 sales target and clocked its first-ever quarter with revenue topping $1 billion. That’s a pointed response to skepticism around AI’s impact on enterprise software demand. Shares were last seen at $188.73, up $45.02 from the previous close, according to the latest figures.
Investors have been hungry for evidence that AI’s gains aren’t just padded into chip stocks and cloud giants, but that software players overseeing and safeguarding AI-driven infrastructure are benefitting too. Datadog fits that bill: its observability suite pulls together performance data across apps, servers, pipelines, and security setups, showing everything in one dashboard.
Datadog reported a 32% jump in first-quarter revenue, reaching $1.006 billion. Looking ahead, the company raised its 2026 revenue outlook to a range of $4.30 billion to $4.34 billion, above the earlier estimate of $4.06 billion to $4.10 billion. Adjusted earnings are now projected at $2.36 to $2.44 per share.
Wall Street was looking for less. Datadog posted quarterly revenue above the $961.3 million LSEG estimate, Reuters said. Adjusted earnings landed at 60 cents per share—beating the consensus of 51 cents.
Datadog CEO Olivier Pomel said the company is “helping customers of all sizes and industries deploy modern, cloud-based, AI-enabled solutions.” Datadog rolled out GPU Monitoring—meant for tracking the graphics-processing chips that power AI model training and inference—plus additional security and developer offerings. Datadog
Wedbush’s Daniel Ives bumped his price target on Datadog up to $220 from $190, sticking with his Outperform label. In his note, Ives said this quarter’s results make it clear: “AI is a powerful demand catalyst rather than a disruptive threat.” He described the report as a “transformational print/guide.” TipRanks
A jump in bigger customers didn’t go unnoticed. Datadog reported roughly 4,550 clients generating $100,000 or more in annual recurring revenue by the end of March, a 21% increase from last year. The company’s cash, equivalents, and marketable securities totaled $4.8 billion.
Just ahead of its earnings report, Datadog announced its government-focused product landed FedRAMP High certification, marking compliance with the federal cloud-security standard for sensitive but unclassified info. As of May 5, the FedRAMP marketplace shows Datadog for Government – High as “FedRAMP Certified.” CISO Emilio Escobar said this move gives agencies “modern observability, faster incident response and operational visibility.” Datadog
The rally spilled over to software stocks with links to cloud data and AI infrastructure. Barron’s noted gains for Snowflake, Dynatrace, and Elastic after Datadog’s report—a move suggesting investors saw the quarter as a signal for peers more plugged into AI operations than those focused on office tasks.
The run-up brings tougher expectations. Datadog hasn’t provided a GAAP comparison for its non-GAAP forecast, citing uncertainty over things like stock-based pay and taxes on equity grants. The company flagged risks: competition, customer renewal rates, rapid tech changes, potential security lapses, and softer IT budgets if macro or trade policies weigh.
The company’s recent move gives it a bit more breathing space in the AI arena. What comes next? Customers will have to ramp up usage as those early AI projects leave pilot status and hit production—where outages, lag, or security issues carry a real price tag.
