What Happened?
Shares of cloud monitoring platform Datadog (NASDAQ:DDOG) jumped 15.6% in the morning session after the company reported better-than-expected fourth-quarter results and provided an upbeat revenue forecast for the upcoming quarter.
The cloud monitoring firm's sales grew 29.2% year-on-year to $953.2 million, surpassing analyst estimates. Adjusted earnings per share also came in at $0.59, which was higher than expected. Looking ahead, Datadog's revenue guidance for the first quarter was optimistic, with the midpoint of its forecast above market consensus. This strong revenue outlook seemed to overshadow the company's weaker-than-expected guidance for adjusted earnings per share for the full year. The positive sales performance and strong forward-looking revenue forecast appeared to fuel investor confidence.
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What Is The Market Telling Us
Datadog’s shares are very volatile and have had 23 moves greater than 5% over the last year. But moves this big are rare even for Datadog and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was about 21 hours ago when the stock gained 2.6% on the news that analysts suggested that the recent "SaaSpocalypse" sell-off had pushed valuations into deeply oversold territory, sparking a wave of opportunistic buying.
While the sector had been hammered in early 2026 by fears that autonomous AI agents would replace traditional seat-based subscriptions, institutional investors began rotating back into "sticky" incumbents. This shift was fueled by a Barclays report arguing that corporate transitions away from legacy systems take years, not weeks, providing a protective moat for established providers in compliance and governance.
Datadog is down 1.2% since the beginning of the year, and at $132.18 per share, it is trading 33.8% below its 52-week high of $199.72 from November 2025. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,144.
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