What Happened?

Shares of cloud monitoring platform Datadog (NASDAQ: DDOG) jumped 21.1% in the morning session after the company reported third-quarter financial results that surpassed Wall Street's expectations and provided an optimistic outlook for the future. 

The monitoring and security platform posted revenue of $885.7 million, a 28.4% increase from the same period last year, and delivered an adjusted earnings per share of $0.55, both of which beat analyst estimates. The company also reported adding 210 new large customers, those spending over $100,000 annually, bringing the total to 4,060. Looking ahead, Datadog issued fourth-quarter revenue guidance that was above market expectations and also raised its financial forecast for full-year earnings. This combination of a strong quarterly performance and a confident outlook fueled positive investor sentiment.

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What Is The Market Telling Us

Datadog’s shares are quite volatile and have had 19 moves greater than 5% over the last year. But moves this big are rare even for Datadog and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 24 days ago when the stock gained 2.9% on the news that the company announced expanded support and new integrations for Oracle Cloud Infrastructure (OCI), which aimed to improve the management of AI and machine learning workloads. The new features included GPU Monitoring, Cloud Cost Management, and Cloud SIEM. These additions were designed to help customers improve reliability, secure modern applications, and better control their spending on Oracle's cloud platform. The announcement positioned Datadog as one of the first observability vendors to provide streamlined GPU monitoring for OCI, a key component for companies scaling their AI operations. This news followed other positive developments, including a contract renewal with OpenAI and several analysts raising their price targets on the stock, citing strong cloud consumption trends and positive usage growth in the company's services.

Datadog is up 30.4% since the beginning of the year, and at $187.26 per share, has set a new 52-week high. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,866.

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