What happened

Shares of Datadog (DDOG 4.95%) charged sharply higher Thursday, surging as much as 16.5%. As of 11:43 a.m. ET, the stock was still up 16.1%.

What sent the cloud monitoring, analytics, and security company higher were results that suggested the sky was not falling.

So what

For the first quarter, Datadog reported revenue of $481.7 million, up 33% year over year, resulting in non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.28. Analysts' consensus estimates were calling for $469.8 million and EPS of $0.23, so Datadog exceeded expectations by a wide margin.

Helping fuel the robust results was strong growth in the number of customers spending $100,000 per year in annual recurring revenue (ARR), which grew to 2,910, up 29%.

Investors were also excited about Datadog's recent expansion into data streams monitoring, providing businesses with real-time monitoring of mission-critical applications -- including banking, payments, and streaming video -- detecting problems and preventing critical downtime.

Now what

Management sees a big opportunity from the ongoing evolution of artificial intelligence (AI). Said founder and CEO Olivier Pomel:

We believe AI will significantly expand our opportunity in observability and beyond. We believe the rise of AI will increase the demand for compute and storage to train and run models, but it will also increase the value of proprietary data and further drive digital transformation and cloud migration, as these are all prerequisites for adoption.

Datadog expects its robust growth to continue. Management is guiding for revenue of about $500 million, up 23% year over year at the midpoint of its guidance. The company is also forecasting adjusted net income of about $0.28. For context, analysts' consensus estimates were calling for revenue of $502 million and adjusted EPS of $0.26, so Datadog's forecast is comfortably within the range of expectations.

Investors had been concerned about the slowing adoption of cloud computing in the face of economic headwinds. Each of the major cloud infrastructure providers have reported decelerating growth in recent weeks. Investors worried this would bleed over into Datadog's results, pressuring the stock, but the company's strong performance and better-than-expected growth helped put those fears to rest.

Given its solid execution and continued strong growth, investors should consider taking Datadog for a walk.