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Datadog, Inc. (DDOG), with a market capitalization of approximately $83.3 billion, is a cloud-based observability and security platform that helps businesses monitor applications, infrastructure, data, and security. The New York-based company uses AI-powered solutions to detect issues, improve performance, strengthen security, and provide unified visibility across complex technology environments.
Shares of this leading cloud software company have considerably outperformed the broader market over the past year. DDOG has increased 99.2% over this period, while the broader S&P 500 Index ($SPX) has rallied 21.3%. On a year-to-date basis, DDOG has also outperformed, gaining 91.8% compared with the index’s 13.3% gain over the same period.
Narrowing the comparison, DDOG has also outperformed the iShares Expanded Tech-Software Sector ETF (IGV), which has gained 4.2% over the past year and declined marginally on a YTD basis.
On August 6, Datadog reported its Q2 FY2026 earnings, with shares falling 19% on the day before rebounding 2% in the following trading session. Despite results topping expectations, investors focused on a flagged usage decline from its largest customer. Revenue grew 35.6% year over year to $1.12 billion, while non-GAAP net income per share rose 41.3% to $0.65.
For the third quarter, Datadog guided revenue to a range of $1.135 billion to $1.145 billion and non-GAAP net income per share of $0.63 to $0.65. For the full year, the company raised its guidance to revenue of $4.45 billion to $4.47 billion and non-GAAP net income per share of $2.50 to $2.54.
For the current fiscal year ending in December 2026, analysts expect DDOG’s diluted EPS to increase 57.1% to $0.66. The company has also delivered impressive earnings performance, surpassing consensus EPS estimates in each of the past four quarters.
Among the 44 analysts covering DDOG stock, the consensus rating is a “Strong Buy.” The rating is based on 37 “Strong Buys,” three “Moderate Buys,” three “Holds,” and one “Strong Sell.”
DDOG’s analyst configuration is more bearish than it was a month ago, when the stock had 38 “Strong Buy” recommendations.
On August 8, UBS analyst Karl Keirstead maintained a “Buy” rating on Datadog while lowering the price target to $280 from $315.
The mean price target of $285.82 implies a 9.6% upside from DDOG’s current share price, while the Street-high target of $340 suggests a potential upside of 30.4%.
