So, you've built a fancy new AI model. Great. Now, how do you actually run it in your business without everything breaking? That's the multi-billion-dollar question companies are wrestling with, and it's the exact problem Datadog Inc. (DDOG) and Sakana AI are teaming up to solve. The partnership announcement gave Datadog's stock a little premarket bump on Thursday, up 0.37% to $110.74.
Think of it this way: Datadog is the company you call when you need to see what's happening inside your digital infrastructure—all the servers, apps, and databases. Sakana AI is a next-generation AI research lab. Their new deal is basically about building a bridge between cutting-edge AI research and the messy reality of running that AI in a corporate environment, especially for big customers in Japan where Datadog already has a footprint.
The plan involves joint research, new product development, and sales strategies. The goal? To help enterprises "understand and operate AI systems" better. In other words, to make the black box of AI a little more transparent and a lot less likely to cause a midnight outage.
This push into making AI usable comes at a good time for Datadog. The company just reported earnings that smashed expectations, thanks in large part to the AI boom. It posted an adjusted profit of 59 cents per share, beating the estimate of 56 cents. Revenue jumped 29% from a year ago to $953.19 million, also coming in well above what analysts were looking for. The company said growing AI adoption is driving stronger demand for its cloud security products. So, this Sakana AI partnership looks like a direct play to double down on that very trend.
On the technical side, the stock's move higher aligns with a generally positive, if muted, day for tech. The market overall was barely up, with the S&P 500 and Nasdaq each gaining 0.04%. Datadog's chart tells a story of near-term caution but long-term strength. The stock is trading about 9.8% below its 20-day average and 4.1% below its 100-day average, which hints at some recent softness. However, over the past year, shares are up and are sitting much closer to their 52-week high than their low.
The momentum indicators are giving mixed signals. The Relative Strength Index (RSI) is at 44.45, which is smack in the middle of neutral territory—not overbought, not oversold. Meanwhile, the MACD indicator is below its signal line, which typically suggests some bearish pressure. Traders might be watching key resistance at $115.00 and support at $100.00.
Looking ahead, the next big financial update isn't until May 5, 2026. For that report, analysts are forecasting earnings of 33 cents per share, which would be down from 46 cents a year earlier. Revenue, however, is expected to climb to $958.41 million from $762 million. One number that jumps out is the price-to-earnings (P/E) ratio of 355.9x. That's a sky-high valuation, meaning investors are paying a huge premium for expected future growth.
Speaking of expectations, Wall Street analysts are still overwhelmingly bullish. The consensus rating is a Buy, with an average price target of $184.11—that's a hefty 66% above where the stock was trading premarket. Recent analyst actions have all been reaffirmations of bullish stances: DA Davidson maintains a Buy with a $225 target, Wedbush reiterates an Outperform rating with a $190 target, and BTIG keeps its Buy rating with a $170 target.
In short, Datadog is making a pragmatic bet. The AI gold rush isn't just about finding the ore; it's about building the tools to refine it and ship it reliably. By partnering with Sakana AI, Datadog is trying to sell the pickaxes and safety gear to the companies digging for AI treasure.
