Datadog Stock (DDOG) Finds Support at $150 into Earnings: What To Expect

Datadog Inc. (DDOG), a leading player in the observability and security space, is preparing to release its third-quarter earnings today. Analysts are keenly watching to see if Datadog can maintain its upward trajectory amid a complex landscape of both opportunities and challenges. The stock has seemingly found support around the $150 level, a key psychological and technical threshold.

Analysts are anticipating an earnings per share (EPS) of $0.46 for the third quarter, unchanged from the $0.46 reported in the same quarter last year. This raises questions about Datadog’s growth trajectory, particularly in light of recent developments affecting the company’s revenue streams. Analysts also project a revenue of approximately $852.27 million, representing a 23.51% year-over-year increase.

A significant headwind for Datadog has been concerns surrounding OpenAI, one of its largest customers. Guggenheim Securities downgraded Datadog's stock in July, citing expectations that OpenAI would reduce its reliance on Datadog's services, opting instead for internally developed observability tools.

This downgrade projected a substantial decline in annual recurring revenue (ARR) from OpenAI, potentially impacting Datadog's overall financial performance. The market reacted negatively to this news, with the stock price falling by 4.14% following the downgrade.

Adding to the complexity, rumors of a potential acquisition of GitLab surfaced in October, with Wolfe Research expressing doubts about the deal's likelihood. The uncertainty surrounding this potential acquisition has also contributed to volatility in Datadog's stock price, as markets weigh the potential benefits and risks of such a strategic move.

However, Datadog has also experienced positive catalysts. Its inclusion in the S&P 500 Index in July led to a significant stock price increase, with shares surging nearly 11% in after-hours trading. This inclusion was expected to attract more institutional backers and enhance the company's visibility, providing a boost to its market capitalization.

Furthermore, Datadog reported strong Q2 2025 financial results, with revenue reaching $827 million, a 28% year-over-year increase. The company also achieved $200 million in operating cash flow and $165 million in free cash flow. Datadog has consistently demonstrated its commitment to innovation, unveiling over 125 new features, including AI agents and enhanced log management capabilities.

Datadog has also been proactive in expanding its ecosystem. The company recently announced expanded support and new integrations for Oracle Cloud Infrastructure (OCI), including GPU Monitoring and Cloud Cost Management. These enhancements aim to improve the management of AI and machine learning workloads, positioning Datadog as a leader in observability for OCI.

Amidst the prevailing narrative of caution, a contrarian perspective warrants consideration. While concerns about OpenAI's potential shift to in-house solutions are valid, it's possible that the market is overestimating the impact.

Datadog's diverse customer base and its proven ability to innovate and adapt suggest that it may be able to offset any revenue loss from OpenAI through new customer acquisitions and the expansion of its service offerings. Moreover, the increasing complexity of modern IT environments creates a growing demand for comprehensive observability solutions, a demand that Datadog is well-positioned to meet.

As Datadog releases its third-quarter earnings, analysts will be scrutinizing the company's performance metrics, particularly its revenue growth, customer acquisition rate, and outlook for future quarters. The company's ability to address concerns about OpenAI and demonstrate continued momentum in its core business will be critical in shaping market sentiment and determining the stock's future trajectory. The support level around $150 will be key to watch, a break below could signal further downside, while a strong earnings report could catapult the stock higher.