Review|DDOG 26Q2: Unchanged Fundamentals Met with Too-High Expectations

In our preview, we expected a solid print by DDOG, but expectations for 26Q3 guidance appeared full while stock positioning was crowded into the print, leaving poor risk-reward for the event. The 26Q2 beat was skinnier than the previous quarter’s, while the 26Q3 guide slightly missed elevated expectations, likely driven by optimization at OpenAI, its largest customer. Non-AI workload growth continued to accelerate with clear cross-sell strength, and the company signed more AI-native customers. Management also confirmed it has renewed its contract with OpenAI despite a sequential decline in usage. We remain positive on DDOG’s fundamentals and positioning in the AI era, and believe a valuation reset is healthy.

Result highlights: an expectation miss

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