Datadog, Inc.

NASDAQ Global Select
Back to all articles
Slightly Bullish +25

Fortinet vs. Datadog: Which Cloud Security Stock Has Better Potential?

AI-generated analysis

📈 Datadog reported second-quarter 2026 revenues increasing 36% to $1.12 billion with free cash flow reaching $279 million.

👥 The company has approximately 33,400 customers, including 4,720 generating at least $100,000 in ARR, contributing about 91% of total ARR.

🛡️ Datadog's security portfolio includes Cloud Security, Code Security, Cloud SIEM, and Data Security to help enterprises consolidate monitoring workloads.

💰 Management guided for 2026 revenues of $4.45-$4.47 billion, implying approximately 22.9% year-over-year earnings growth based on Zacks Consensus Estimates.

⚠️ A major customer's user reduction beginning in the third quarter of 2026 is flagged by management as a near-term growth consideration.

📉 Datadog trades at a 22.92X trailing 12-month Price/Sales multiple, which is higher than competitor Fortinet's 17.22X multiple.

🏆 The article assigns Datadog a Zacks Rank #3 (Hold) compared to Fortinet's Zacks Rank #1 (Strong Buy).

🚀 Recent customer wins include a South American bank signing a seven-figure annualized deal and a Fortune 100 health insurer expanding toward 19 products.

⚔️ Datadog faces intense competition from established vendors, cloud-provider solutions, and lower-priced alternatives in the security market.

📉 The article concludes that Fortinet is currently a better pick than Datadog due to faster billings growth, robust cash flow, and raised guidance.

Bullish Signals
  • Datadog reported second-quarter 2026 revenues increasing 36% to $1.12 billion with free cash flow reaching $279 million.
  • The company has approximately 33,400 customers, including 4,720 generating at least $100,000 in ARR, contributing about 91% of total ARR.
  • Recent customer wins include a South American bank signing a seven-figure annualized deal and a Fortune 100 health insurer expanding toward 19 products.
  • Management guided for 2026 revenues of $4.45-$4.47 billion, implying approximately 22.9% year-over-year earnings growth based on Zacks Consensus Estimates.
Risk Factors
  • A major customer's user reduction beginning in the third quarter of 2026 is flagged by management as a near-term growth consideration.
  • Datadog faces intense competition from established vendors, cloud-provider solutions, and lower-priced alternatives in the security market.
Full Analysis
The article compares Fortinet and Datadog as cloud security stocks, concluding that Fortinet currently offers better investment potential due to stronger execution and valuation. However, it acknowledges Datadog's strong growth profile in observability and security, noting its expanding customer base and adoption of multiple products. Datadog reported second-quarter 2026 revenues increasing 36% to $1.12 billion with free cash flow reaching $279 million. The company has approximately 33,400 customers, including 4,720 generating at least $100,000 in ARR. Management flagged a major customer's user reduction beginning in the third quarter of 2026 as a near-term growth consideration. Datadog guided for 2026 revenues of $4.45-$4.47 billion, implying approximately 22.9% year-over-year earnings growth based on Zacks Consensus Estimates. The stock trades at a 22.92X trailing 12-month Price/Sales multiple, which is higher than Fortinet's 17.22X. Analysts maintain a Zacks Rank #3 (Hold) for Datadog. While Datadog faces intense competition and risks like security breaches or reduced IT spending, its unified SaaS platform allows revenue expansion as customers add workloads. The article suggests Fortinet is the better pick right now due to raised guidance and moderate valuation, though Datadog continues to deliver strong revenue growth and AI momentum.