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Datadog’s $30 Million Enterprise Wins — Is Wall Street Underestimating AI Demand?

Datadog reported strong financial and operational performance in the second quarter of fiscal 2026, with revenue reaching $1.12 billion, a 36% increase year-over-year, surpassing the high end of its guidance. The company’s customer base expanded to approximately 33,400, including around 4,720 customers with annual recurring revenue (ARR) exceeding $100,000, who collectively account for about 91% of total ARR. Free cash flow stood at $279 million, reflecting a 25% margin. Gross margin was 79.6%, slightly down from prior periods due to ongoing investments in innovation balanced by operational efficiencies. Underlying growth drivers included broad adoption of Datadog’s platform across AI-native customers, who continue to increase in number and scale, as well as non-AI customers, whose revenue growth accelerated to the high 20s percentage range year-over-year.