Datadog (DDOG): 3Q26 Preview – Platform Momentum Continues to Build

Ahead of 3Q26, we remain constructive on Datadog despite a known headwind from its largest customer. Underlying demand remains healthy: the non-AI-native business accelerated into the high-20s in 2Q, enterprise new-logo annualized bookings more than doubled YoY, and the business excluding the largest customer grew ~36% YoY. Partner checks point to broad-based strength across consumption, multi-product adoption, new logos, core observability and AI-related workloads. We view ~33-34% total revenue growth as the bar for 3Q and a high-20s guide for 4Q, with the key debate whether Datadog can sustain ~30% growth ex-largest customer into 2027. Valuation is demanding at ~16x CY27 sales, but durable growth justifies the premium. Reiterate Overweight with a $300 price target.