Datadog Posts Q2 Beat as Observability, AI Demand Remain Strong, RBC Capital Markets Says

MT Newswires Live08-08

Datadog (DDOG) delivered stronger-than-expected Q2 as revenue growth accelerated and demand remained broad across its core observability business and artificial intelligence-related workloads, RBC Capital Markets said in a note Thursday.

Revenue rose 35.6% from a year earlier, marking a fifth consecutive quarter of accelerating growth, the firm said, as it noted that strength was broad-based across geographies, customer sizes and industries, while growth among non-AI-native customers also accelerated.

Microsoft-backed (MSFT) OpenAI renewed its contract in Q3 on terms similar to the prior agreement, though usage has begun to decline, and Datadog's management responded by making its outlook more conservative by assuming only OpenAI's minimum commitments, according to the note.

The firm said the renewal helps alleviate near-term concerns, while continued growth in core observability, security, Bits AI and AI training workloads supports a multiyear growth opportunity.

RBC maintained an outperform rating on Datadog, with a $280 price target.

Shares of Datadog were over 3% higher in Friday trading.

Price: 236.28, Change: +6.99, Percent Change: +3.05

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