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Very Bullish +85

Meet the AI Stock Running Rings Around Nvidia in 2026. It Could Just Be Getting Started

🚀 Datadog (DDOG) stock surged 51% in 2026, more than double Nvidia's 21% gain despite market volatility.

💻 Last year investor fear that AI would render traditional SaaS obsolete was dispelled by strong Q1 2026 performance.

📈 Datadog hit its first $1 billion revenue quarter with a 32% year-over-year increase to exactly $1 billion.

⚡ Adjusted earnings per share (EPS) rose 30% to $0.60, beating the analyst consensus of $0.51.

💰 Operating cash flow reached $335 million while free cash flow grew 18% to $289 million.

🔍 A new GPU monitoring tool was launched to help customers optimize costs and performance for AI projects.

🤝 Major tech companies signed six-, seven-, and eight-figure annualized deals for advanced AI model training.

📉 Datadog raised its full-year revenue forecast to $4.32 billion, up from the previous guidance of $4.08 billion.

⚠️ Valuation has increased to 72 times next year's expected earnings, which concerns some value investors.

✅ Wall Street support remains strong with 92% of analysts rating Datadog as a buy or strong buy in May.

📈 The stock price spiked 95% over the past month after the blockbuster financial report.

🤖 Unlike Nvidia which generates $1 billion in days, Datadog achieved this milestone with quarterly growth.

💡 Investors are shifting focus to downstream AI winners as adoption expands beyond chipmakers.

🛍️ The Motley Fool Stock Advisor team did not include Datadog in their latest list of 10 best stocks.

⏳ Longtime shareholder sentiment is positive, watching for continued accelerating growth trends.

Bullish Signals
  • Datadog (NASDAQ: DDOG) surged 51% in 2026, delivering more than double Nvidia's gains despite broader market headwinds.
  • The company generated $1 billion in Q1 revenue, a 32% year-over-year increase that marks its first billion-dollar quarter and fastest growth pace in three years.
  • Adjusted earnings per share rose 30% to $0.60, significantly beating analysts' consensus estimates of $0.51.
  • High-value customers with annual recurring revenue over $100,000 grew by 21%, expanding the high-margin base of Datadog's most lucrative clients.
  • Cash generation remains robust with operating cash flow of $335 million and free cash flow of $289 million, representing a 23% and 18% increase respectively.
  • Datadog successfully launched GPU monitoring tools that help businesses optimize AI spending and performance, addressing critical ROI concerns for adopting enterprises.
  • The company secured several large six-, seven-, and eight-figure annualized deals with major technology companies training advanced AI models.
  • Datadog raised its full-year revenue guidance to $4.32 billion (up from $4.08 billion) and adjusted EPS to $2.40, signaling management confidence in sustained demand.
  • 92% of analysts currently rate Datadog as a buy or strong buy, reflecting strong institutional support following the blockbuster quarter.
  • The stock has appreciated significantly, with investors flocking to the name after its earnings beat, highlighting renewed market enthusiasm for downstream AI winners.
Risk Factors
  • Datadog's valuation has surged to 72 times next year's expected earnings, representing a significant premium that may deter value investors.
  • Following its recent price spike and blockbuster quarter, investor sentiment could reverse if the company fails to maintain its accelerating growth rate.
  • The Motley Fool Stock Advisor team explicitly excluded Datadog from their list of top 10 stocks for now, suggesting potential concerns about its current risk profile or fair value.
Full Analysis
Datadog (NASDAQ: DDOG), an AI-powered observability and security platform, has experienced a significant surge in stock performance throughout 2026, rising 51% to outpace Nvidia (NASDAQ: NVDA), which gained 21%. This positive momentum follows a blockbuster first quarter for Datadog where revenue reached $1 billion, marking its fastest growth pace in three years with a 32% year-over-year increase. Adjusted earnings per share also improved by 30% to reach $0.60, surpassing analysts' consensus estimates for both revenue and EPS. The company's growth was driven by robust performance among high-value customers with annual recurring revenue of $100,000 or more, which increased by 21%. A key catalyst for this success was the launch of GPU monitoring tools, allowing businesses to optimize spending and troubleshoot AI projects effectively as they scale. Consequently, Datadog secured several large AI-centric deals, including six-, seven-, and eight-figure annualized contracts with two major technology companies training advanced AI models. Following these results, management raised its full-year forecast to $4.32 billion in revenue and adjusted EPS of $2.40 at the midpoint, up from previous guidance figures. Wall Street analysts remain highly bullish on Datadog, with 92% rating it as a buy or strong buy following the stock's recent price spike of over 95% in the past month. The elevated valuation reflects investor confidence that the company has successfully adapted to the AI boom by helping customers achieve better return on investment rather than facing disruption. However, at a forward price-to-earnings ratio of roughly 72 times next year's earnings, Datadog trades at a premium that may concern value investors, though growth investors might consider small positions as part of a balanced portfolio.