How Datadog’s Q3 Results and New Cloud Storage Offering Have Changed Its Investment Story (DDOG)

• Datadog, Inc. recently reported third quarter 2025 results, posting sales of US$885.65 million, up from US$690.02 million a year earlier, alongside updated earnings guidance and the launch of a new Storage Management product for cloud data cost optimization.
• An interesting development is the expansion of Datadog’s capabilities in cloud storage optimization, signaling its intent to address the growing needs of data- and AI-focused customers.
• We’ll examine how Datadog’s combination of robust revenue growth and cloud product innovation shapes its evolving investment narrative.

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Datadog Investment Narrative Recap

Owning Datadog shares means believing in the ongoing digital transformation driving greater demand for unified observability, security, and cloud cost management platforms. The latest earnings showcased strong topline growth and new product momentum, but rising operating expenses and pressure on margins remain the key short-term challenge, while the risk around customer concentration among AI-centric users has not materially changed due to this news.

The recent launch of Datadog’s Storage Management product, designed to reduce uncontrolled cloud storage costs for data-intensive workloads, directly supports the company’s positioning as a one-stop platform and is especially relevant as enterprises push for cloud cost efficiency. This strengthens Datadog’s innovation narrative, but the impact on the risk of customer usage optimization or contract renegotiations is still uncertain.

On the other hand, investors should be aware of customer concentration risk if major AI-native clients suddenly trim their cloud observability spend...

Read the full narrative on Datadog (it's free!)

Datadog's outlook anticipates $5.2 billion in revenue and $406.8 million in earnings by 2028. This forecast assumes a 19.9% annual revenue growth rate and a $282.2 million increase in earnings from the current $124.6 million.

Uncover how Datadog's forecasts yield a $168.91 fair value, a 9% downside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided 12 different fair value views on Datadog, spanning US$112.84 to US$211.30. With recent focus on cloud storage cost reduction, these varied opinions highlight how expectations around Datadog’s ability to retain and grow large AI and data-driven accounts matter to the stock’s outlook.

Explore 12 other fair value estimates on Datadog - why the stock might be worth 39% less than the current price!

Build Your Own Datadog Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Datadog research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Datadog research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Datadog's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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