New York, February 10, 2026, 17:38 (ET) — After-hours trading
Datadog, Inc. (DDOG.O) saw its shares jump $15.64, or 13.7%, to $129.67 in after-hours trading Tuesday following stronger-than-expected quarterly results. The cloud-monitoring company reported revenue of $953.2 million for the quarter ending Dec. 31, up 29%. Adjusted earnings came in at 59 cents per share, beating analysts’ 55-cent forecast. For the first quarter, Datadog projects revenue between $951 million and $961 million. However, its full-year revenue and profit guidance fell short of expectations, despite the company highlighting wider adoption of its tools among customers. 1
This print is crucial as investors look for evidence that cloud-software spending remains steady, not only in major AI labs but also within typical enterprise budgets. Datadog’s model monitors real customer usage, meaning demand can shift rapidly — one way or the other.
It arrives in a market quick to penalize expensive software stocks at the first sign of growth softening. A strong beat might buy some breathing room, but the guidance shapes sentiment for the days ahead—and for the entire sector.
Datadog reported $327 million in operating cash flow and $291 million in free cash flow for the quarter, the latter reflecting funds left after investments in equipment and capitalized software. CEO Olivier Pomel highlighted that the company launched “over 400 new features” in 2025 aimed at easing cloud migration and enabling “next-gen AI” production deployments. The company also announced an investor day scheduled for Feb. 12 in New York. By the end of 2025, Datadog held $4.47 billion in cash, cash equivalents, and marketable securities, with 603 customers generating at least $1 million in annual recurring revenue—a key subscription run-rate metric. 2
Datadog offers “observability” software—tools that extract signals from applications and servers, helping engineers detect outages and slowdowns before users notice. Increasingly, customers want this insight for AI-driven systems, which tend to be noisy, expensive, and tricky to secure.
Competition doesn’t hold back. Datadog battles for budgets against observability rivals and security vendors alike, while cloud giants keep cramming more monitoring features into their platforms.
Billings, a key indicator linked to invoices and potential future revenue, jumped 33% to roughly $1.2 billion, according to Investors Business Daily. This boost helped buoy sentiment around software stocks. However, the report also pointed to mounting competition from companies like Dynatrace and Palo Alto Networks as the observability and security sectors grow more crowded. 3
Before the report dropped, RBC Capital trimmed its price target from $175 to $150 but maintained an Outperform rating, pointing to “peer-multiple compression” as a key factor behind the drop in software valuations. Analyst Matthew Hedberg noted that cautious revenue and margin forecasts “could weigh on shares but act as a clearing event.” He also flagged the Feb. 12 analyst day as a moment to watch for details on Datadog’s AI strategy, security efforts, and margins. 4
Mizuho’s Gregg Moskowitz noted that Datadog is seeing gains as more AI clients hit scale, with “non-AI growth also accelerating” in Q4, Barron’s reported. He kept his Outperform rating and $170 price target intact. 5
Still, the upside hits the guide. If cloud budgets shrink or customers cut back to save cash, Datadog’s consumption-based revenue can drop sharply — and the stock usually reacts fast to that risk.
During Wednesday’s regular session, traders will be eyeing if the rally sticks after the initial surge of earnings-driven buying fades. Volume levels, momentum in other cloud stocks, and any early insights from the earnings call will likely determine if this is just a one-day spike or the start of a bigger trend.
Thursday’s investor day in New York is shaping up as a key moment. Investors are set to challenge management for sharper insights on 2026 demand, the speed of AI-driven adoption, and if the company can boost margins while expanding product sales within current accounts.
