Datadog Stock (DDOG) Under Pressure Into Earnings: What to Expect

Datadog stock (NASDAQ: DDOG) is trading at $115.85 in the pre-market, 1.61% higher from the previous day's close. Despite the gain, the stock faces significant headwinds heading into its Q4 2025 earnings report, 14.77% lower YTD.

Analysts are estimating an earnings per share (EPS) of $0.55 and revenue of $918.20 million for the quarter. This would reflect a 10%+ gain on EPS from the $0.49 last year, and a 13.24% sales growth rate.

Technically, Datadog's 50-day simple moving average (SMA) sits at $162.29, while the 200-day SMA is $145.81. The current share price languishes below both averages, suggesting persistent bearish momentum that you can see on the chart.

A major concern weighing on the stock is the potential loss of OpenAI as a key customer. Guggenheim Securities downgraded Datadog to “Sell” in July 2025, citing OpenAI's development of in-house observability tools. The transition could result in a revenue shortfall exceeding $150 million in 2026, potentially reducing Datadog's growth rate to 15%. This potential loss is a significant overhang on the stock.

Counterbalancing this negative news, Datadog's inclusion in the S&P 500 Index on July 9, 2025, provided a positive catalyst. Replacing Juniper Networks, the S&P 500 inclusion boosted Datadog's visibility and credibility, leading to a nearly 15% surge in the stock price to $155.15. However, the gains from this event have since been eroded.

The company's Q3 2025 financial results, reported in November 2025, were strong, with revenue of $886 million, a 28% year-over-year increase. The company also provided optimistic revenue guidance for Q4, projecting $914 million at the midpoint. This positive performance initially propelled the stock price upward by 23.6%.

Despite the Q3 beat, TD Cowen reduced its price target for Datadog from $235 to $200 last month, while maintaining a “Buy” rating. This adjustment suggests a more cautious outlook on the company's future performance and a recognition of the risks involved.

Institutional investment activity has been mixed. Rakuten Investment Management Inc. acquired 16,262 shares of Datadog in January 2026, valued at approximately $2.32 million, indicating continued, albeit measured, institutional interest.

The upcoming earnings report takes on added significance given these conflicting signals. A beat on both EPS and revenue estimates could provide a much-needed boost to the stock price, alleviating concerns about slowing growth and the potential impact of the OpenAI situation. Conversely, a miss on either metric could exacerbate the downward pressure on the stock.

The market's reaction will likely hinge on the company's guidance for Q1 2026 and the full fiscal year.

Furthermore, markets will be closely monitoring Datadog's customer growth, particularly the number of customers with annual recurring revenue (ARR) exceeding $100,000 and $1 million. These metrics provide insights into the company's ability to expand its business with existing customers and attract larger enterprises.

Given the high valuation multiples typically assigned to high-growth software companies, any perceived slowdown in Datadog's growth trajectory is likely to be met with significant selling pressure. The company needs to demonstrate that it can continue to innovate and expand its product offerings to maintain its competitive advantage.