New York, Feb 11, 2026, 09:38 EST — Trading underway
- Datadog shares slipped in early trading following Tuesday’s post-earnings surge
- Q4 revenue jumped 29% to $953 million, with the 2026 revenue forecast pegged between $4.06 billion and $4.10 billion
- Traders are eyeing the investor day on Feb. 12 for fresh targets and new details on AI security
Datadog Inc shares dropped roughly 3.4% to $125.31 in early Wednesday trading, retreating from the gains sparked by yesterday’s earnings report. The stock fluctuated between $124.39 and $131.38, even as the Nasdaq 100 tracker Invesco QQQ climbed about 0.6%. (Google)
The move comes as software stocks attempt to stabilize following a steep AI-driven selloff. JPMorgan strategists, including Dubravko Lakos-Bujas, noted the market is factoring in worst-case AI disruption scenarios that are “unlikely to materialize over the next three to six months.” Meanwhile, Morgan Stanley research head Katy Huberty described the valuation swings as “sentiment-driven, not fundamental.” (Reuters)
Datadog offers cloud-based monitoring and analytics tools designed to track apps, servers, and security alerts—what engineers refer to as observability. Investors link its growth to generative AI, which often drives more data through corporate systems, increasing costs for monitoring and security.
Datadog reported fourth-quarter revenue up 29%, hitting $953 million, with non-GAAP net income at 59 cents per diluted share—excluding costs like stock-based compensation. The company posted $1.05 billion in operating cash flow and $915 million in free cash flow for 2025. It also launched new products, including Bits AI SRE, and expanded its roster to 603 customers each generating at least $1 million in annual recurring revenue (ARR). CEO Olivier Pomel highlighted that Datadog “delivered over 400 new features and capabilities” in 2025, while forecasting first-quarter revenue between $951 million and $961 million, and 2026 revenue ranging from $4.06 billion to $4.10 billion. (SEC)
LSEG data revealed analysts were expecting $916.6 million in quarterly revenue and 55 cents per share in adjusted profit. After the report, shares jumped over 14% on Tuesday. The company also noted that nearly half of its customers now use four or more of its products. However, Datadog’s full-year adjusted profit forecast, ranging from $2.08 to $2.16 a share, missed estimates of $2.37, despite its first-quarter revenue projection beating consensus. (Reuters)
Wednesday’s drop seems like a reset following Tuesday’s spike. Traders remain caught between AI-driven demand for monitoring and a market quick to punish any sign of slower growth or shrinking margins.
Scotiabank lowered its price target for Datadog from $180 to $160 but maintained its sector outperform rating, MT Newswires reported. (MarketScreener)
Some analysts highlight Datadog’s consumption-based pricing, where costs rise with increased log and metric usage and fall when activity slows. According to Investors.com, billings climbed 33% to $1.2 billion this quarter, amid growing competition from firms like Dynatrace and Palo Alto Networks as customers diversify their tools. Investors can expect more details on strategy and the AI security roadmap at Datadog’s investor day on Feb. 12. (Investors)
Guidance cuts both ways: a conservative outlook leaves room to exceed expectations later but also keeps pressure on a stock that’s swung sharply in both directions. If cloud budgets tighten, usage-based spending can drop fast, and fears over AI disruption might overshadow solid quarterly results once more.
