Why is Datadog stock surging today?

Datadog stock surged 5.7% in pre-open trading today after cloud data platform peer Snowflake delivered a blockbuster earnings report after Wednesday’s market close, triggering a broad sympathy rally across the enterprise software and AI observability space. Datadog shares rose in Wednesday’s after-hours session following the strong earnings release from Snowflake, with the two companies sharing close thematic ties in the AI-driven cloud infrastructure market.

Snowflake reported second-quarter revenue of $1.55 billion, representing 35% year-over-year growth, with product revenue of $1.49 billion — up 37% year-over-year — and remaining performance obligations of $9.00 billion, up 30%. Adjusted earnings per share came in at $0.62, well ahead of Wall Street’s forecast of just $0.45. Snowflake shares rose roughly 22% in extended trading on Wednesday after the results and guidance surpassed expectations.

Datadog offers an AI-powered observability and security platform and often moves in sympathy with Snowflake. The sympathy lift comes at a particularly meaningful moment for Datadog, as the stock had been under significant pressure in recent weeks. Datadog shares experienced a roughly 22% decline over the prior month, primarily due to a major AI customer’s reduced future usage. Snowflake’s strong results, coming in the wake of solid reports from other enterprise software names, further challenged the narrative that software companies are in danger of disruption from artificial intelligence agents.

The broader market provided little directional support today, with the S&P 500 essentially flat and the Nasdaq modestly lower, underscoring that Datadog’s pre-market gain was entirely driven by sector-specific momentum rather than macro tailwinds. Taken together, Snowflake’s decisive earnings beat rekindled investor confidence in enterprise AI cloud spending, offered a timely counterweight to the customer concentration concerns that had weighed on Datadog, and gave the stock the catalyst it needed to trade sharply higher heading into the regular session.