Datadog (NASDAQ:DDOG) Shares Gap Up on Strong Earnings

Datadog, Inc. (NASDAQ:DDOG)’s share price gapped up prior to trading on Tuesday following a stronger than expected earnings report. The stock had previously closed at $114.01, but opened at $124.18. Datadog shares last traded at $131.5180, with a volume of 6,572,671 shares trading hands.

The company reported $0.59 EPS for the quarter, topping analysts’ consensus estimates of $0.55 by $0.04. Datadog had a net margin of 3.32% and a return on equity of 4.14%. The firm had revenue of $953.19 million during the quarter, compared to the consensus estimate of $916.53 million. During the same quarter in the previous year, the firm posted $0.49 earnings per share. The company’s revenue was up 29.2% compared to the same quarter last year. Datadog has set its FY 2026 guidance at 2.080-2.160 EPS and its Q1 2026 guidance at 0.490-0.510 EPS.

Trending Headlines about Datadog

Here are the key news stories impacting Datadog this week:

• Positive Sentiment: Q4 results beat consensus — Datadog reported $0.59 EPS vs. $0.55 expected and revenue of ~$953M, above estimates, showing ~29% y/y revenue growth. Datadog (DDOG) Surpasses Q4 Earnings and Revenue Estimates
• Positive Sentiment: Outlook materially raised — Datadog guided Q1 EPS to $0.490–0.510 (vs. street ~$0.35) and FY26 EPS to $2.080–2.160 (vs. consensus ~1.60), and gave revenue targets above expectations; that upside guidance is the main catalyst. Datadog Stock Surges After Earnings. Software Gets Some Rare Good News.
• Positive Sentiment: Operational strength and product momentum — Datadog reported strong cash flow ($1,050M operating, $915M free cash flow FY25), growth in large customers (603 $1M+ ARR customers vs. 462 a year ago), and GA launches (Bits AI SRE Agent, Storage Management, Feature Flags, Data Observability). Datadog Announces Fourth Quarter and Fiscal Year 2025 Financial Results
• Neutral Sentiment: Positive media coverage amplifies investor attention — major outlets highlighted the beat-and-raise, helping sentiment and flow into software names. Datadog Stock Surges After Earnings. Software Gets Some Rare Good News.
• Neutral Sentiment: Broader market tailwinds for software stocks (improving investor sentiment/Fear & Greed index) likely amplified the move, rather than company-specific news alone. Nasdaq Jumps Over 200 Points As Software Stocks Rebound
• Neutral Sentiment: Competitive/technology risks noted — analysis on AI agents suggests potential pressure on Datadog’s model over time; worth monitoring but not an immediate headwind to guidance-driven move. AI Agents Challenge Datadog’s Model While Valuation Signals Potential Upside
• Negative Sentiment: Some analysts trimmed price targets ahead of earnings (RBC, Cantor Fitzgerald, Jefferies lowered targets to ~$150–160); these cuts reflect valuation concerns and temper upside at current levels. RBC cuts price target on Datadog

Analysts Set New Price Targets

A number of analysts have weighed in on the stock. Capital One Financial reduced their price objective on shares of Datadog from $219.00 to $156.00 and set an “overweight” rating for the company in a research report on Friday, January 16th. BNP Paribas Exane cut their price target on shares of Datadog from $210.00 to $175.00 and set an “outperform” rating on the stock in a research note on Thursday, January 15th. Wall Street Zen downgraded shares of Datadog from a “buy” rating to a “hold” rating in a research note on Saturday, January 17th. Jefferies Financial Group dropped their price objective on Datadog from $180.00 to $160.00 and set a “buy” rating on the stock in a report on Friday. Finally, Weiss Ratings reissued a “sell (d+)” rating on shares of Datadog in a report on Wednesday, January 21st. Thirty-six research analysts have rated the stock with a Buy rating, four have assigned a Hold rating and two have issued a Sell rating to the stock. According to data from MarketBeat, the company has a consensus rating of “Moderate Buy” and an average target price of $184.38.

Insider Activity at Datadog

In other news, CTO Alexis Le-Quoc sold 53,912 shares of the firm’s stock in a transaction on Monday, December 8th. The shares were sold at an average price of $154.05, for a total value of $8,305,143.60. Following the completion of the sale, the chief technology officer owned 295,448 shares in the company, valued at approximately $45,513,764.40. This trade represents a 15.43% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, CEO Olivier Pomel sold 100,754 shares of the stock in a transaction dated Monday, November 17th. The stock was sold at an average price of $181.18, for a total transaction of $18,254,609.72. Following the transaction, the chief executive officer directly owned 533,358 shares of the company’s stock, valued at $96,633,802.44. This represents a 15.89% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 538,917 shares of company stock worth $86,804,288 over the last quarter. Company insiders own 8.70% of the company’s stock.

Hedge Funds Weigh In On Datadog

Several institutional investors and hedge funds have recently added to or reduced their stakes in DDOG. Elevation Point Wealth Partners LLC grew its holdings in Datadog by 3.3% during the third quarter. Elevation Point Wealth Partners LLC now owns 1,697 shares of the company’s stock worth $242,000 after acquiring an additional 55 shares during the period. Chicago Partners Investment Group LLC grew its stake in shares of Datadog by 1.6% during the 4th quarter. Chicago Partners Investment Group LLC now owns 4,778 shares of the company’s stock worth $622,000 after purchasing an additional 73 shares during the period. Vivaldi Capital Management LP increased its holdings in shares of Datadog by 2.8% in the 3rd quarter. Vivaldi Capital Management LP now owns 2,689 shares of the company’s stock valued at $383,000 after purchasing an additional 74 shares in the last quarter. Westside Investment Management Inc. lifted its stake in shares of Datadog by 74.3% in the third quarter. Westside Investment Management Inc. now owns 176 shares of the company’s stock valued at $27,000 after purchasing an additional 75 shares during the period. Finally, Nilsine Partners LLC lifted its stake in shares of Datadog by 2.4% in the third quarter. Nilsine Partners LLC now owns 3,396 shares of the company’s stock valued at $484,000 after purchasing an additional 78 shares during the period. Institutional investors and hedge funds own 78.29% of the company’s stock.

Datadog Stock Up 14.3%

The company has a debt-to-equity ratio of 0.29, a current ratio of 3.66 and a quick ratio of 3.66. The company has a market capitalization of $45.69 billion, a price-to-earnings ratio of 428.15, a price-to-earnings-growth ratio of 19.95 and a beta of 1.27. The firm’s 50-day simple moving average is $134.40 and its two-hundred day simple moving average is $144.20.

About Datadog

Datadog (NASDAQ: DDOG) is a cloud-based monitoring and observability platform that helps organizations monitor, troubleshoot and secure their applications and infrastructure at scale. Its software-as-a-service offering collects and analyzes metrics, traces and logs from servers, containers, cloud services and applications to provide real-time visibility into system performance and health. Datadog’s platform is widely used by engineering, operations and security teams to reduce downtime, accelerate incident response and improve application reliability.

The company’s product suite includes infrastructure monitoring, application performance monitoring (APM), log management, real user monitoring (RUM), synthetic monitoring and network performance monitoring, along with security-focused products such as security monitoring and cloud SIEM.