Datadog stock soars 31% as blockbuster earnings prove AI drives growth, not disruption

Datadog stock soars 31% on blockbuster earnings as AI winners emerge in software

How Twilio and Datadog are winning back investor confidence Datadog surged 31% on Thursday after reporting blockbuster earnings and lifting its guidance for the year, showing how some software names are starting to prove their case as winners in artificial intelligence. Quarterly revenue topped one billion dollars for the first time. The pop fueled rallies in shares of Snowflake and MongoDB, which each climbed 10%. Datadog provides the cloud infrastructure that AI models from OpenAI and Anthropic run on. According to analysts, OpenAI is its biggest customer. CEO Olivier Pomel revealed on the earnings call that the company landed two major hyperscaler customers for training in their superintelligence labs. "This was an eye-popping print," wrote Andrew Sherman, analyst at TD Securities, who called it a "must-own stock." The positivity surrounding Datadog follows strong earnings from Twilio last week. Investors say the performance from Datadog and Twilio underscores how companies that can deploy AI-native solutions while also articulating their path to monetization can ease disruption fears, for now. At Twilio's investor day on Wednesday, the communications software company unveiled new platform capabilities that help AI agents communicate and work together more effectively. The updates include logging customer data, facilitating handoffs, and creating lists of actionable data. It may sound mundane, but Twilio CEO Khozema Shipchandler told CNBC that these enhancements will dramatically improve the customer experience by making agents better at solving customer issues.

Datadog stock soars after AI guidance raised, with cloud momentum

The New York-based group, which specializes in cloud monitoring and analytics platforms, is fully capitalizing on the accelerating adoption of generative AI and the modernization of corporate digital infrastructures. This momentum has enabled it to comfortably beat market expectations in the latest quarter and provide a significantly upgraded outlook. Datadog now forecasts annual revenue of $4.30bn and $4.34bn, up from a previous range of $4.06bn to $4.10bn. Adjusted EPS is expected between $2.36 and $2.44, above the prior range of $2.08 to $2.16. CEO Olivier Pomel highlighted that the group is supporting companies across numerous sectors in deploying solutions based on cloud and artificial intelligence, two markets where growth continues to accelerate. Dan Ives, analyst at Wedbush, says that, "this growth is driven by accelerating demand for its platform in both AI-native and more traditional applications, reinforcing Datadog's strategic positioning at the heart of cloud migration, digital transformation, and AI adoption." He also believes that this release marks a significant turning point for the company. "We view these results as a major milestone for Datadog, demonstrating that artificial intelligence acts as a growth engine rather than a disruptive threat. Its positioning in cloud, digital transformation, and now AI training and inference provides multi-year visibility to support accelerated growth and continued market share gains," he added. Analysts at JP Morgan also maintain a positive outlook on the stock. The bank considers Datadog a "category leader in the cybersecurity space," benefiting from long-term growth potential largely underpinned by artificial intelligence. The broker notably pointed out that new code generation tools, such as Claude Code, are significantly accelerating application production and mechanically increasing the need for infrastructure and cloud monitoring. JP Morgan also recalled that Datadog had mentioned, during its previous earnings call, an eight-figure contract won with "a leader in AI models," potentially Anthropic according to analysts. For the American bank, however, the stakes go beyond the identity of this client. This momentum primarily illustrates the expansion of Datadog's addressable market, driven by the rising prominence of artificial intelligence across the entire digital economy.