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Datadog (DDOG) AI Stock Analysis

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Datadog

(NASDAQ:DDOG)

Select Model

Neutral 69 (OpenAI - 5.2)

Rating:69Neutral

Price Target:

$286.00

▲(15.86% Upside)

Action:Downgraded

Date:08/07/26

DDOG’s score is primarily supported by strong financial quality—especially high margins and standout, growing free cash flow—plus a generally positive earnings update and solid forward operating-margin guidance. Offsetting that, valuation is extremely stretched (very high P/E) and the technical setup is weak with the stock trading below key short-term moving averages; near-term risk is also elevated by the largest-customer usage reduction embedded in guidance.

Positive Factors

Cash Generation

Consistent, large free cash flow (TTM FCF ~$1.15B) and strong operating cash flow provide durable financial optionality. This supports sustained R&D, go‑to‑market spend, M&A or balance sheet defense without relying on external financing, insulating long‑term growth execution.

Negative Factors

Customer Concentration Risk

A single very large customer's usage decline materially affects near‑term guidance, highlighting concentration risk. Dependency on a few large customers can amplify revenue volatility and force conservative forecasting, reducing visibility into sustainable top‑line growth.

Read all positive and negative factors

Positive Factors

Negative Factors

Cash Generation

Read all positive factors

Datadog Key Performance Indicators (KPIs)

Any

Customers Over $100k

Customers Over $100k
Shows the number of customers generating over $100,000 in annual revenue, reflecting the company's ability to attract and retain high-value clients.

Chart InsightsDatadog’s steady rise in $100k+ customers is driven more by expansion within accounts and AI-led adoption than by simple unit growth—management highlights deeper product adoption and an AI cohort that generates outsized ARR. That explains accelerating ARR and billings, but also creates concentration risk (a few AI-heavy accounts and the largest customer influenced guidance) and keeps margin pressure from required product and sovereignty investments until newer offerings scale.

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The Fly

Datadog (DDOG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$88.61B

Dividend YieldN/A

Average Volume (3M)4.23M

Price to Earnings (P/E)484.5

Beta (1Y)1.27

Revenue Growth31.52%

EPS Growth37.42%

CountryUS

Employees8,100

SectorTechnology

Sector Strength88

IndustrySoftware - Application

Share Statistics

EPS (TTM)0.50

Shares Outstanding334,904,600

10 Day Avg. Volume3,469,557

30 Day Avg. Volume4,226,341

Financial Highlights & Ratios

PEG Ratio-10.05

Price to Book (P/B)12.65

Price to Sales (P/S)13.78

P/FCF Ratio47.20

Enterprise Value/Market Cap<0.01

Enterprise Value/Revenue<0.01

Enterprise Value/Gross Profit<0.01

Enterprise Value/Ebitda<0.01

Forecast

1Y Price Target

$289.61

Price Target Upside17.32% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering37

EPS Forecast (FY)2.53

Revenue Forecast (FY)$4.47B

Datadog Business Overview & Revenue Model

Company Description

Datadog, Inc. offers a comprehensive cloud-based monitoring and analytics solution, serving the needs of developers, IT operations personnel, and business stakeholders across North America and internationally. This Software-as-a-Service (SaaS) off...

How the Company Makes Money

Datadog primarily makes money through subscription revenue from its cloud-based platform. Customers pay recurring fees to use one or more Datadog products (modules) that are typically priced based on usage/consumption metrics (for example, based o...

Datadog Earnings Call Summary

Earnings Call Date:Aug 06, 2026

(Q2-2026)

% Change Since: |

Next Earnings Date:Nov 05, 2026

Earnings Call Sentiment Positive

The call presents a predominantly positive operational and financial picture: strong 36% YoY revenue growth, record sequential revenue added, robust cash generation, meaningful product and AI innovation, expanding customer monetization (more customers using multiple products and rising $100K+ customers), and strong bookings and retention metrics. Near-term conservatism in guidance is driven largely by a usage reduction at one very large customer and modest gross margin pressure from investments and event costs. Management emphasized accelerating demand across the broader customer base and derisked guidance to reflect the single‑customer variability.

Positive Updates

Strong Revenue Growth and Beat

Revenue of $1.12B in Q2, up 36% year-over-year and above the high end of guidance.

Negative Updates

Largest Customer Usage Reduction and Guidance Impact

A longtime, very large customer renewed but showed a usage reduction beginning in Q3; management fully derisked guidance for this reduction. Q3 revenue guide implies 28%–29% YoY growth (vs Q2 actual +36%), reflecting the impact of this customer’s reduced usage.

Read all updates

Q2-2026 Updates

Positive

Negative

Strong Revenue Growth and Beat

Revenue of $1.12B in Q2, up 36% year-over-year and above the high end of guidance.

Read all positive updates

Company Guidance

Datadog guided Q3 revenue of $1.135–$1.145 billion (up ~28–29% year‑over‑year), non‑GAAP operating income of $260–$270 million (implying a 23–24% operating margin) and non‑GAAP EPS of $0.63–$0.65 on ~378 million diluted shares; for fiscal 2026 it expects revenue of $4.45–$4.47 billion (≈30% growth), non‑GAAP operating income of $1.01–$1.03 billion (≈23% margin) and non‑GAAP EPS of $2.50–$2.54 on ~376 million diluted shares. Management said the guide is conservative, incorporates a usage reduction from its largest customer, and assumes net interest & other income of about $180 million, cash taxes of $30–$40 million, a 21% non‑GAAP tax rate going forward, and CapEx plus capitalized software of roughly 4–5% of revenue.

Datadog Financial Statement Overview

Summary

Financials are strong overall, led by excellent and consistently growing free cash flow (TTM FCF ~$1.15B; OCF ~$1.23B) and durable high gross margins (~77%–81%). Revenue has scaled materially (from ~$1.0B in 2021 to ~$3.97B TTM) and net income turned positive in 2023–TTM, but profitability remains relatively thin (TTM net margin ~3.7%) with some operating-income volatility and modest ROE (~3.8%).

Income Statement

Positive

Balance Sheet

Positive

Cash Flow

Very Positive

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	3.97B	3.43B	2.68B	2.13B	1.68B	1.03B
Gross Profit	3.15B	2.74B	2.17B	1.72B	1.33B	794.54M
EBITDA	263.26M	193.84M	265.94M	111.00M	13.09M	25.57M
Net Income	177.58M	107.74M	183.75M	48.57M	-50.16M	-20.75M
Balance Sheet
Total Assets	7.55B	6.64B	5.79B	3.94B	3.00B	2.38B
Cash, Cash Equivalents and Short-Term Investments	4.99B	4.47B	4.19B	2.58B	1.88B	1.55B
Total Debt	1.28B	1.54B	1.84B	902.34M	837.52M	807.75M
Total Liabilities	3.18B	2.91B	3.07B	1.91B	1.59B	1.34B
Stockholders Equity	4.37B	3.73B	2.71B	2.03B	1.41B	1.04B
Cash Flow
Free Cash Flow	1.15B	1.00B	835.88M	632.37M	353.52M	250.52M
Operating Cash Flow	1.23B	1.05B	870.60M	659.95M	418.41M	286.55M
Investing Cash Flow	-1.36B	-1.33B	-736.84M	-731.37M	-384.67M	-273.74M
Financing Cash Flow	82.85M	-572.48M	787.08M	58.28M	36.02M	34.94M

Datadog Technical Analysis

Technical Analysis Sentiment

Negative

Last Price246.86

Price Trends

50DMA

249.04

Negative

100DMA

202.55

Positive

200DMA

171.30

Positive

Market Momentum

MACD

0.28

Positive

RSI

45.29

Neutral

STOCH

35.92

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DDOG, the sentiment is Negative. The current price of 246.86 is below the 20-day moving average (MA) of 256.81, below the 50-day MA of 249.04, and above the 200-day MA of 171.30, indicating a neutral trend. The MACD of 0.28 indicates Positive momentum. The RSI at 45.29 is Neutral, neither overbought nor oversold. The STOCH value of 35.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DDOG.

Datadog Risk Analysis

Datadog disclosed 59 risk factors in its most recent earnings report. Datadog reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Datadog Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DT	77 Outperform	$14.35B	97.46	5.72%	―	17.94%	-69.28%
PD	75 Outperform	$915.44M	5.44	76.52%	―	3.69%	―
CRWD	75 Outperform	$225.95B	-4,669.05	-0.58%	―	23.17%	73.57%
DDOG	69 Neutral	$88.61B	484.53	3.78%	―	31.52%	37.42%
SNOW	66 Neutral	$115.81B	-94.39	-57.21%	―	31.07%	16.46%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

DDOG

Datadog

240.91

116.39

93.47%

PagerDuty

11.36

-4.12

-26.61%

CRWD

CrowdStrike Holdings

221.78

115.57

108.80%

Dynatrace

49.56

2.14

4.51%

SNOW

Snowflake

332.26

137.36

70.48%

Datadog Corporate Events

Executive/Board ChangesShareholder Meetings

Datadog Shareholders Back Board, Pay at 2026 Meeting

Positive

Jun 16, 2026

On June 15, 2026, Datadog, Inc. held its 2026 Annual Meeting of Stockholders, where shareholders re-elected Olivier Pomel, Dev Ittycheria, Shardul Shah and Ami Vora as Class I directors to serve until the 2029 annual meeting, reinforcing continuit...

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 07, 2026