Datadog stock moved sharply higher after the cloud monitoring and analytics company delivered a first-quarter report that beat Wall Street expectations and raised its full-year outlook.
Wedbush lifted its price target on Datadog Inc. to $220 from $190 following the results, while keeping an Outperform rating on the shares. The move reflected stronger-than-expected revenue, earnings, customer growth and guidance from a company that investors increasingly view as tied to enterprise cloud spending and AI workloads.
Shares of Datadog surged nearly 30% on Thursday afternoon, trading around $186 after the earnings release.
Q1 Results Beat Expectations
Datadog reported first-quarter revenue of $1.006 billion, up 32% from a year earlier. That topped analyst expectations of about $960 million and marked the company’s first quarter above the $1 billion revenue level.
Adjusted earnings were $0.60 per share, ahead of consensus estimates near $0.51 per share. Non-GAAP operating income totaled $223 million, equal to a 22% operating margin, while free cash flow reached $289 million.
| Metric | Q1 Result |
|---|---|
| Revenue | $1.006 billion |
| Revenue growth | 32% year over year |
| Adjusted EPS | $0.60 |
| Non-GAAP operating income | $223 million |
| Free cash flow | $289 million |
The company also continued to expand among larger customers. Datadog ended the quarter with about 4,550 customers generating more than $100,000 in annual recurring revenue, up 21% from roughly 3,770 a year earlier.
That large-customer base matters for investors because Datadog’s model depends heavily on expanding usage after customers land on the platform. Stronger adoption among major accounts can point to deeper platform penetration across observability, security, infrastructure monitoring and newer AI-related use cases.
Guidance Raise Supports the Bull Case
Datadog also raised its fiscal 2026 outlook. The company now expects full-year revenue of $4.30 billion to $4.34 billion, compared with prior guidance of $4.06 billion to $4.10 billion. That new range also came in above analyst expectations of roughly $4.12 billion.
The company increased its non-GAAP earnings outlook to $2.36 to $2.44 per share, up from its earlier forecast of $2.08 to $2.16 per share.
Wedbush described the quarter as a meaningful validation of Datadog’s position in cloud migration, digital transformation and AI adoption. The firm pointed to demand from both AI-native customers and more traditional enterprise customers as part of the reason for its more bullish price target.
Some of Wedbush’s more detailed comments about bookings, annual recurring revenue additions and customer mix were not independently verified from Datadog’s public release, but the broader message was clear: the firm sees Datadog benefiting from rising infrastructure complexity as companies move more workloads into cloud and AI environments.
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What Buyers and Investors Should Watch
For software buyers, the results reinforce Datadog’s position as a major vendor in observability and cloud monitoring. The company’s growth suggests that enterprises are still spending on tools that help teams monitor applications, infrastructure, logs, security signals and AI workloads from a single platform.
For investors, the key question is whether Datadog can keep turning that demand into durable revenue growth without giving up too much margin. The latest quarter showed a mix that markets generally favor: faster revenue growth, higher guidance, strong free cash flow and continued expansion among large customers.
That said, the stock’s sharp post-earnings move raises the bar for future quarters. After a nearly 30% rally, investors will likely look closely at usage trends, large-customer growth, billings, remaining performance obligations and whether AI-related demand continues to add to growth rather than disrupt existing software budgets.
Datadog’s Q1 report gave Wedbush enough confidence to raise its target, and it gave the market a fresh reason to reprice the stock. The next test is whether the company can sustain that momentum through the rest of fiscal 2026.