Update (February 10, 2026):
Q4 2025 earnings confirmed every signal in this analysis. Revenue accelerated to $953M (+29%). Non-AI growth surged to 23%. Moat trajectory upgraded to confirmed widening. Read the full Q4 earnings update.
Datadog: Down 46% From Peak While Every Metric Accelerates
Datadog's stock has fallen 46% from its 2024 peak. Meanwhile, revenue growth accelerated from 25% to 28%, non-AI customer usage hit a 12-quarter high, and RPO grew 53%. Insiders sold $110M+ with zero purchases. Q4 2025 earnings arrive February 10 — followed by Investor Day on February 12. Our four-lens committee found the dominant bearish narratives materially disconnected from operational reality.
Disclosure: As of 2026-02-10, the Runchey Research Model Trading Fund holds call options in DDOG. Per our Editorial Policy, these are classified as Event-Driven holdings and may be adjusted immediately following the relevant catalyst event. View our full Editorial Integrity & Disclosure Policy.
Q3 2025 YoY, accelerating
$2.79B committed revenue
Customers on multi-product
3-month volume, zero buys
Something unusual is happening with Datadog. The stock is trading at roughly $107 — down 46% from its 2024 peak — while every operational metric that matters is moving in the right direction. Revenue growth is accelerating, not decelerating. The non-AI customer base is expanding at its fastest rate in three years. New logo bookings more than doubled year-over-year. And the forward pipeline (RPO at $2.79B, up 53%) suggests the acceleration has legs.
The bearish case rests on three narratives: growth is slowing, the business is just an AI story (read: OpenAI), and the valuation is stretched. We ran Datadog through four analytical lenses — Gravy Gauge, Moat Mapper, Myth Meter, and Insider Investigator — to test each of these claims against the evidence.
With Q4 2025 earnings on February 10 and Investor Day on February 12, the timing matters. Here is what we found — and what to watch.
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The Central Question
What Four Lenses Found
Strong usage-based model with mid-high 90s retention; sensitive to cloud cycles and OpenAI concentration (5-10% of revenue)
Wide switching cost moat via multi-product adoption (84% on 2+, 16% on 8+); widening trajectory
Bearish narratives materially wrong: growth accelerating, non-AI usage at 12-quarter high
~53x non-GAAP P/E implies 20-25% revenue CAGR; current delivery at 26-28% exceeds the bar
$110M+ insider selling, zero open market buying; all under 10b5-1 plans, blackout overlap
Standard tech environment; pending FedRAMP High is a growth catalyst, not a dependency
The Three Bearish Narratives — and What the Data Shows
The Myth Meter lens tested three dominant bearish narratives against operational evidence. Two are materially contradicted by the data. One remains speculative and unfalsified.
"Growth Is Decelerating"
DISCONNECTEDRevenue growth accelerated from 25% (Q1) to 27% (Q2) to 28% (Q3). FY2025 guidance was raised four consecutive quarters — from 20% to 26%. RPO grew 53% YoY. New logo bookings more than doubled. This is accelerating growth, not deceleration.
"It's Just an AI / OpenAI Story"
DISCONNECTEDNon-AI customer usage growth hit its highest level in 12 quarters. The trend accelerated into October. Non-AI revenue grew 20% YoY in Q3, up from 18% in Q2. AI customers represent 12% of revenue — meaningful but not the dominant driver of acceleration.
"AI Agents Will Replace Observability"
UNFALSIFIEDNo Fortune 500 company has publicly replaced Datadog with AI-agent monitoring. Datadog is building its own agent products (Bits AI). This narrative is speculative with zero supporting evidence (E0) — but it also cannot be dismissed. It is the one bear case our committee could not refute with data.
The critical distinction: two of three bearish narratives are materially wrong based on available evidence. The third is a forward-looking structural thesis that is neither confirmed nor refuted. This is the gap the Myth Meter identified — the market is pricing operational reality that does not exist.
The Platform Moat Is Widening
The Moat Mapper classified Datadog's competitive position as DEFENSIBLE with a widening trajectory. The primary evidence is multi-product adoption — a metric that directly measures switching cost depth.
Every adoption tier is increasing. Customers using 8+ products grew from 12% to 16% year-over-year — this represents the deepest tier of platform lock-in. Gross retention remains in the mid-to-high 90s. Net revenue retention is approximately 120%. These are not the metrics of a company losing competitive position.
The committee considered DOMINANT but held at DEFENSIBLE. Multiple viable competitors exist (Dynatrace, Splunk/Cisco, Grafana Labs), OpenTelemetry creates a credible vendor-neutral standard, and hyperscaler consolidation plays (Cisco/Splunk) create well-funded bundle competitors. The moat is wide — but the market is not winner-take-all.
The One Signal That Does Not Align
Three lenses paint a picture of operational strength. The Insider Investigator creates the tension. Over the past three months, insiders sold $110M+ in Datadog stock. The lifetime ratio since 2019 is 64:1 (sells to buys). Zero open market purchases have been made despite a 46% stock decline.
3-month insider selling volume
Lifetime sell:buy ratio since 2019
Zero open market buys during 46% decline
The committee classified this as MIXED rather than MISALIGNED for three reasons. First, all identified sales were under pre-scheduled 10b5-1 plans. Second, $545M in stock-based compensation over nine months means net executive exposure may actually be increasing despite sales. Third, the pre-earnings blackout period overlapped with the steepest portion of the stock decline — insiders were likely legally prohibited from buying during the worst of it.
Still, the complete absence of voluntary open market purchases during a period of significant stock decline prevented a more favorable ALIGNED classification. This is the one area where the operational story and the insider behavior do not match.
Where Our Models Disagreed
The most interesting debates emerged across lenses rather than within them. Two conflicts stand out heading into earnings.
Insider Selling vs. Operational Strength
Three lenses see a company executing at the top of its game. The Insider Investigator sees $110M+ in selling with zero offsetting purchases. Both readings use E2 evidence. The tension is real: either insiders are routinely diversifying while the business is strong, or they have information about Q4/2026 trajectory not yet visible in Q3 data. February 10 resolves this.
OpenAI Renewal: Bullish, Neutral, or Bearish?
Management described a "9-figure annualized expansion with a leading AI company" with "better economics for a higher commitment." One analyst read this as a strong commitment signal. Bullet Hole critique identified three possible interpretations: volume discount (bearish), commitment signal (bullish), or similar spend at lower unit price (neutral). The committee settled on "managed transition" — material expansion that buys time, but with pricing leverage shifting to the customer.
What to Watch on February 10 (and February 12)
Every lens flagged Q4 2025 earnings as the single highest-impact data gap. With Investor Day following two days later, this is a consequential week. Here are the specific metrics our committee will be monitoring.
If FY2026 guidance implies above 22% growth, it confirms the durability thesis and validates the DISCONNECTED narrative gap. Below 20% would shift expectations from DEMANDING toward STRETCHED.
Currently estimated at 5-10% of total revenue based on E1 evidence. Any disclosure or implied trajectory will disambiguate the single largest customer concentration question. Watch for AI-native cohort revenue percentage — was 12% in Q3.
The 12-quarter high in non-AI usage growth is the cornerstone of the DISCONNECTED classification. If this reverts, the narrative gap narrows. If it sustains or accelerates, the disconnect deepens.
4+ adoption at 54% (up from 49%), 8+ at 16% (up from 12%). Any deceleration in deepest-tier adoption would weaken the widening moat trajectory. Acceleration toward 8+ at 20%+ would strengthen toward DOMINANT.
The blackout period lifts after earnings. Watch for any open market purchases by C-suite — this would be the strongest governance alignment signal. Continued selling with no buying escalates toward MISALIGNED.
Investor Day typically provides multi-year frameworks. Watch for long-term margin targets, TAM expansion plans, and any disclosure of gross retention or product-level economics — the gaps that currently constrain our confidence.
Bottom Line
The dominant bearish narratives about Datadog are materially disconnected from operational reality. Growth is accelerating, not decelerating. The base business is strengthening, not dependent on AI. The platform moat is widening, not eroding. At ~53x non-GAAP P/E, the market demands continued execution — but current delivery exceeds what the price implies.
The unresolved tensions are real: $110M+ in insider selling with zero purchases, OpenAI concentration at 5-10% of revenue with uncertain renewal economics, and the unfalsified (but evidence-free) AI disruption thesis. Q4 earnings on February 10 and Investor Day on February 12 may resolve several of these simultaneously.
This analysis is for educational purposes only — it is not a recommendation to buy or sell any security.
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