Is DDOG a good stock to buy? We came across a bullish thesis on Datadog, Inc. on Hunterbrook’s Substack. In this article, we will summarize the bulls’ thesis on DDOG. Datadog, Inc.’s share was trading at $146.69 as of May 4th. DDOG’s trailing and forward P/E were 453.32 and 65.79 respectively according to Yahoo Finance.
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Datadog, Inc. operates an observability and security platform for cloud applications in the United States and internationally. DDOG is emerging as a critical observability layer within the AI infrastructure stack as evidence increasingly points to a major expansion with a leading frontier AI company, widely believed to be Anthropic. The company previously disclosed an eight-figure annualized contract with a leading AI foundation model provider, while analysis of Claude traffic suggests Datadog’s RUM and telemetry tools are embedded across Claude.ai and its desktop app, capturing performance and error diagnostics from millions of sessions.
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This integration highlights Datadog’s role in enabling AI companies to monitor latency, reliability, and user experience at scale, a mission-critical function as LLM usage accelerates. Beyond browser-level monitoring, code and bug reports indicate Datadog integrations extending into developer tooling such as Claude Code, where telemetry events and logs are routed through Datadog’s infrastructure, suggesting a phased rollout of observability across production systems. The consumption-based pricing structure further strengthens the upside, as revenue scales directly with AI usage growth rather than fixed contracts.
For Datadog, this positions the company as a key beneficiary of AI workload expansion, with leading AI labs consolidating fragmented open-source and in-house monitoring stacks into a unified platform. The depth of integration across Claude products signals strong product stickiness and reinforces Datadog’s competitive moat in observability software.
As AI applications become increasingly complex and latency-sensitive, demand for real-time telemetry, logging, and performance monitoring is expected to rise structurally. Datadog’s expanding footprint within one of the fastest-growing AI ecosystems underscores a durable growth driver, with potential for revenue acceleration as consumption scales alongside AI adoption.
Previously, we covered a bullish thesis on Datadog, Inc. (DDOG) by bigbullcap on X (Twitter) in May 2025, which highlighted its multi-product observability platform, diversified ARR streams, and expanding enterprise adoption across monitoring, logs, and security driving durable software compounding. DDOG’s stock price has appreciated by approximately 28.15% since our coverage. Hunterbrook shares a similar view but emphasizes AI-native integration, particularly Datadog’s deep embedding within frontier AI workloads like Anthropic, highlighting consumption-based scaling as the key differentiator.
Datadog, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held DDOG at the end of the fourth quarter which was 72 in the previous quarter. While we acknowledge the risk and potential of DDOG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DDOG and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
