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How AI Agent Monitoring At Datadog Shares Has Changed Its Investment Story

Simply Wall St · 2d ago
  • Datadog reported at the Goldman Sachs Communacopia + Technology Conference that it has begun monetizing observability for AI agents, with thousands of customers already using the new monitoring capability.
  • This early traction in AI agent observability suggests Datadog is turning a new class of machine driven workloads into a distinct revenue opportunity within its broader platform.
  • We will now examine how Datadog's early monetization of AI agent observability could reshape its investment narrative around unified observability.

Scan how other AI infrastructure plays are responding to this monitoring shift by reviewing the hand picked 89 AI infrastructure stocks alongside Datadog's move into agent observability.

Datadog Investment Narrative Recap

To own Datadog, you need to believe unified observability and security stay central as cloud and AI workloads grow more complex. The big near-term swing factor is whether new products keep usage expanding faster than customers trim cloud costs. The AI agent observability news fits that story, but on its own does not radically change the near-term setup.

Risk still clusters around spending concentration in AI-native clients and operating costs that have been growing quickly. If large customers optimize usage or renegotiate, that could pressure growth, especially with hyperscalers and open-source rivals pushing their own monitoring tools.

The fresh piece of information is Datadog already charging for AI agent observability with thousands of customers using it. That is an operational signal that AI workloads are moving from experiments into measurable production usage on the platform, which can matter for how durable usage looks through optimization cycles.

For you as an investor, the key question is whether this AI agent capability deepens Datadog’s role as a default control plane for cloud and AI systems. If it does, it can support the existing catalyst narrative around product breadth, cross-sell potential, and long-term retention, while still sitting alongside the ongoing risks of heavy R&D spend and intense competition.

Datadog's current earnings of US$177.6 million sit against analyst expectations for US$771.6 million by 2029, which implies roughly a fourfold increase in earnings. Forecasts also point to 24.5% yearly revenue growth and projected 2029 revenue of US$7.7 billion.

Uncover how Datadog's fair value indicates a 29% potential upside to its current price, a gap that may narrow more quickly than many investors anticipate.

NasdaqGS:DDOG 1-Year Stock Price Chart
NasdaqGS:DDOG 1-Year Stock Price Chart

Exploring Other Perspectives

One alternate view focuses on Datadog’s pricing power. The most cautious analysts worry that open source and low cost rivals cap what Datadog can charge, so their pre news models only pencilled in revenue of about US$6.7b and earnings of roughly US$360.7 million by 2029. That is a far more restrained story than consensus, and fresh AI agent monetization could eventually push those expectations higher or lower.

Explore 4 other Datadog fair value estimates, including one that suggests it could be worth just $223.41.

Decide For Yourself

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

Looking For More Investment Ideas Beyond Datadog?

If Datadog has you thinking differently about how AI, cloud, and monitoring fit together, it can help to widen the lens and compare it with other opportunities that share some of the same characteristics.

  • If you want potential mispricing plus quality, scan a curated set of 32 high quality undervalued stocks to see which businesses might offer more attractive entry points than the headline names everyone talks about.
  • For investors who care most about balance sheet strength, filter for companies with cleaner finances using this list of solid balance sheet and fundamentals (23 results) to find businesses that may be better placed to handle shocks and still fund growth.
  • If you are hunting for less crowded opportunities with solid fundamentals, start with a focused group of 15 high quality undiscovered gems that many investors may not be watching yet.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.