Preview | DDOG 1Q26: Stable Core, OpenAI Migration Pushed Out, Bits AI Contribution Still Early

We spoke with three former / current Datadog (DDOG) sales and channel experts this quarter, and additionally collected first-hand usage feedback from a large North American enterprise customer. Overall, DDOG’s core business held up well in 1Q26, but with clear bifurcation: the AI-native cohort (including AI startups within the AWS ecosystem) grew above expectations as cloud consumption accelerated, while traditional and mid-market enterprises turned more cautious on observability spending as more of their budget was reallocated toward AI projects. Customer feedback on Bits AI was muted; enterprise customers concluded that the cost / benefit tradeoff did not yet pencil after testing, and only the AI-native cohort showed relatively positive uptake. OpenAI’s migration off DDOG is progressing somewhat more slowly than we previously assumed, with full migration now expected around 4Q26, while Anthropic’s usage continues to grow rapidly off a low base. We expect 1Q26 revenue and 2Q26 guidance to extend the trend of beating consensus by ~5–6 ppts seen in recent quarters, and view the setup heading into print as healthier given the delayed OpenAI migration gap.

---

1Q26 Results Update And Outlook

North America Channel Expert A