Datadog surges after boosting 2026 sales forecast, pulling software stocks higher
Shares of Datadog are surging after the cloud-monitoring platform announced Q1 results that beat Wall Street forecasts on the top and bottom lines while hiking its full-year sales guidance.
Key numbers:
Revenue of $1.01 billion (up 32% year over year and above analyst estimates of $957.8 million).
Adjusted EPS of $0.60 (estimate: $0.52).
Full-year revenue guidance was lifted to $4.3 billion to $4.34 billion from the earlier range of $4.06 billion to $4.1 billion. Management also raised the company’s full-year guidance, now giving an adjusted EPS outlook of $2.36 to $2.44.
The boost to the sales outlook isn’t just helping Datadog, but also the beaten-down software industry at large. The iShares Expanded Tech Software ETF is up about 4% as of 10:46 a.m. ET, with the likes of Palo Alto Networks, GitLab, Palantir, Atlassian, and CrowdStrike outperforming.
“Overall, we view this as a transformational print/guide for DDOG as the company continues to demonstrate that AI is a powerful demand catalyst rather than a disruptive threat with mission-critical positioning across cloud migration, digital transformation, and now AI training/inference workloads creating a multi-year runway for accelerating growth and continued share gains,” wrote Wedbush Securities analyst Dan Ives in the wake of this report, boosting his price target to $220 from $190.
The rally comes as Datadog announced that it has received FedRAMP High certification, meeting federal government cloud security and compliance standards for handling sensitive unclassified information. The certification is designed to protect controlled unclassified information in cloud environments through strict security controls.
“This milestone reinforces Datadog’s leadership in cloud security and compliance, and sets a new standard for observability platforms in regulated sectors,” said Emilio Escobar, CISO at Datadog.
Going into the report, Datadog had gained over 47% year to date.
