Bernstein: Datadog Q2 Revenue Growth Reaches 35.6%, Will Moderately Slow to 33% in Second Half

According to TechFlow Research, Bernstein's August 6 research report noted that Datadog's Q2 revenue was $1.121 billion, up 35.6% year-over-year, accelerating 340 basis points quarter-over-quarter, marking the strongest growth rate since 2022. The company's quarterly revenue exceeded guidance by $46 million, and the midpoint of the full-year guidance was raised by more than 3 times. Non-AI business revenue grew over 20% year-over-year. Bernstein expects growth in the second half to slow by about 200 basis points to around 33%. The largest AI customer, OpenAI, saw a decline in spending during renewal in early Q3; Bernstein has adjusted down its annualized contract value to approximately $115 million. The second-largest AI customer, Anthropic, is expected to grow 10% to 15% quarter-over-quarter in Q3 and Q4, with steady growth. Affected by volume contraction from top customers, the net retention rate will see a one-time dip in Q3. AWS web traffic metrics suggest there may be an "air pocket" in Q4. Bernstein maintains a "Market Perform" rating with a price target of $237, implying about 16% downside from the current stock price, believing that the current adjusted P/E ratio of about 105 times for 2026 is fully priced.