Datadog (DDOG) is back in focus after crossing US$1b in quarterly revenue and topping Q1 2026 earnings expectations, a combination that has coincided with strong share-price momentum and upbeat analyst sentiment.

Beyond the latest quarter, Datadog’s momentum has been strong, with a 68.3% 1 month share price return and a 94.2% 1 year total shareholder return. This reflects how recent earnings beats and technical signals are reshaping expectations around growth and risk.

If Datadog’s surge has you looking for what else might be benefiting from the AI trend, it could be worth checking out 46 AI infrastructure stocks

With the stock near analysts’ average price target and only a small implied intrinsic discount, the key question now is whether Datadog is trading close to fair value or if the recent surge still leaves room for markets to be underestimating its potential.

Most Popular Narrative: 22.5% Overvalued

Against the last close at $222.32, the most followed narrative implies a fair value of $181.52, so the stock sits well above that narrative anchor.

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.

This raises the question of what kind of revenue runway and earnings lift are being pencilled in to justify that gap, and how rich the implied future multiple really is.

Result: Fair Value of $181.52 (OVERVALUED)

However, that narrative can quickly look stretched if AI focused customers trim usage more sharply than expected, or if competing observability tools pressure pricing and margins.

Another Way To Look At Value

Our DCF model presents a slightly different perspective from the popular narrative. On this view, Datadog at $222.32 sits just below an estimated future cash flow value of $225.27, which appears modestly undervalued rather than materially overvalued. The tension is clear: which framework do you trust more for the long term?

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 49 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

With mixed signals around fair value and future expectations, sentiment on Datadog is clearly divided. It makes sense to review the numbers, pressure test the assumptions and weigh both the upside and downside risks before taking a stance, starting with 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.