One Reason To Buy Datadog Stock After Its Fall
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Datadog (DDOG) shares lost 34.9% over the past month, compared with a 2.3% decline for the S&P 500. The steepest drop hit on November 4, 2026. Shares fell 14.4% that day after Datadog said its largest customer scaled back usage. Management now expects fourth-quarter revenue growth of 25% to 26%. That marks a step down from 35% in the third quarter, though the forecast counts the big customer only at its minimum commitment. So how fast is Datadog growing outside its largest customer?
Growth Outside Datadog’s Largest Customer Is Accelerating
Management said on the November 4 call that revenue growth excluding the largest customer accelerated again in the third quarter of fiscal 2026. Within that, growth from customers outside AI, a narrower group, picked up for a fifth straight quarter, reaching the high-20s percent, up from about 20% a year earlier. For the fourth quarter, management’s forecast implies growth in the low to mid-30s percent once the largest customer is set aside, so that one customer, counted at its minimum commitment, accounts for the gap down to the total forecast.
Management described the strength as broad across industries and customer segments. Datadog’s infrastructure monitoring products are growing in the mid-30s percent and now bring in more than $2 billion in annual recurring revenue. The company also now serves over 850 AI customers, up from about 750 a quarter earlier.
Fast growth is not new for Datadog. Across its last three back-to-back twelve-month periods, its revenue grew 28.7% on average, against 6.5% for the S&P 500. Growth this fast, holding up outside the one customer that pulled back, is the reason buyers might point to after the fall.
What Are Buyers Paying For In Datadog Stock?
Even after the fall, buyers pay 15.5 times Datadog’s sales over the past twelve months, against 3.2 times for the S&P 500. They are paying for growth rather than profit. Over the same twelve months, Datadog’s reported operating margin was 2.3%, against 19.0% for the S&P 500.
The most specific risk to that growth comes from Datadog’s biggest customers. The largest customer, an AI company, reduced its usage in the third quarter while staying above its minimum commitment. Management also said it renewed contracts early with several large customers, including large AI customers, raising their commitments in return for better pricing, and that those renewals hold back revenue in the short term.
Growth from AI customers continues to outpace the rest of the business by a wide margin, management said. So the customers lifting Datadog’s growth are also the ones that can slow it.
Datadog’s Year-End Call Brings Its 2027 Guidance
Datadog’s next report covers the fourth quarter of fiscal 2026. Management said it will give guidance for 2027 on that year-end call, where revenue growth excluding Datadog’s largest customer is the measure to watch.
Not Sure Datadog Is Worth It At This Price?
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