Datadog (DDOG) is back in the spotlight after reporting first quarter 2026 results with sales of US$1.01b and net income of US$52.57m, alongside higher full year revenue guidance.

The stock has been on a strong run, with a 30 day share price return of 83.45% and a year to date share price return of 51.63%. The 1 year total shareholder return of 73.16% points to momentum that extends beyond this quarter’s earnings reaction.

If Datadog’s move has you thinking about what else is working in AI infrastructure, it could be worth scanning a curated list of 40 AI infrastructure stocks

With Datadog now trading near US$202.84 after a sharp run and sitting roughly 9% below an average analyst price target, the key question is whether the recent strength still leaves upside or if the stock already reflects future growth.

Most Popular Narrative: 11.7% Overvalued

With Datadog’s fair value estimate at $181.52 versus a last close of $202.84, the most followed narrative views the stock as priced ahead of that model.

Accelerating enterprise cloud migration and broader adoption of AI workloads are driving increased demand for unified observability and security platforms, positioning Datadog as a mission-critical vendor and supporting continued topline revenue growth as digital transformation deepens across industries.

Curious what earnings path and margin profile sit behind that valuation gap? The narrative leans on strong compounding in both revenue and profits, plus a rich future earnings multiple that assumes Datadog stays firmly embedded in large enterprises.

Result: Fair Value of $181.52 (OVERVALUED)

However, rising competition in observability and security, along with tighter scrutiny of cloud and AI related budgets, could pressure Datadog’s growth assumptions and the premium valuation narrative.

Another View: DCF Points in the Opposite Direction

The most popular narrative pegs Datadog as 11.7% overvalued at a fair value of $181.52, yet our DCF model points the other way, with an estimated future cash flow value of $224.67 versus a share price of $202.84, suggesting the stock trades about 9.7% below that mark.

That split between a narrative driven fair value and a cash flow based estimate leaves you with a simple question: which set of assumptions do you find more reasonable before putting fresh money to work or deciding what to do with an existing position?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Datadog for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The split between bullish rewards and flagged risks in this article is clear, so do not wait to check the underlying data and decide what feels reasonable for you. A good place to start is by weighing the 2 key rewards and 3 important warning signs

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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.