Datadog: Blowout Quarter, But No One Seems To Have Taken Note

Summary

• Datadog just reported a quarter in which it delivered an impressive growth inflection, accelerating revenue and raising guidance, yet shares remain under pressure due to negative sentiment and macro fears.
• AI observability is a massive, underappreciated tailwind for Datadog; its solutions are foundational for monitoring generative AI and LLM deployments across enterprises.
• Valuation is now far less of an outlier at 12x EV/S, with strong free cash flow and margin expansion likely as new AI-driven products gain traction and opex growth moderates.
• Despite risks around customer concentration and macro, I see current weakness as a buying opportunity and recommend accumulating Datadog for patient, growth-focused investors.