Preview|DDOG 3Q26: Constructive Checks, Enterprise AI Supports Core Demand and Consolidation Gains

Summary

DDOG’s 3Q26 setup remains constructive. Our repeat channel checks point to healthy demand with some seeing acceleration and above-plan performance. Existing-customer expansion is improving, new customers are buying more modules at entry, and enterprise AI deployments are creating additional demand for infrastructure monitoring, application tracing and logs. We see this as a broadening of the core observability opportunity, with DDOG also gaining share as customers consolidate fragmented toolsets and migrate from incumbent platforms. AI-native demand also remains healthy as our check suggests its largest AI customer’s usage has stabilized and resumed growth following its renewal and the guidance reset. This supports a recovery in DDOG ARR from that customer, although recognized revenue lags and is expected to decline initially. Meanwhile, continued training demand from other AI-native customers supports strong momentum into 4Q despite moderation at the other large LLM customer. Budget discipline, logging optimization and uneven partner execution remain relevant. Overall, we expect DDOG could deliver 36% YoY revenue growth in 3Q26, beating guidance by 5–6 percentage points and meeting buyside expectations. We expect the high end of 4Q26 revenue guidance to imply 30–31% YoY growth, effectively signaling stable sequential revenue growth despite a roughly 3-percentage-point tougher comparison.

3Q26 Checks and Outlook — Healthy Demand and Better Expansion

Channel Expert A — Global GSI