Datadog (DDOG -3.14%) is a monitoring and security platform for cloud applications. The company's software-as-a-service (SaaS) platform integrates and automates various functions to provide unified, real-time observability and security across customers' entire technology systems.
The company's platform is becoming increasingly crucial to customers as they bring more of their business operations into the cloud by helping them protect their vital information. Datadog is also rapidly integrating artificial intelligence (AI) into its platform to provide enhanced capabilities for its users, as they also tap into the power of this technology to bolster their businesses.
Datadog's growing importance has led to its inclusion in the S&P 500 index in mid-2025. Here's everything you need to know about investing in the cloud company.
How to buy
How to buy Datadog stock
Anyone interested in adding Datadog stock to their portfolio can do so through their brokerage account. Here's a step-by-step guide to investing in stocks.
- Step 1: Open your brokerage app: Log into your brokerage account where you handle your investments.
- Step 2: Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Step 3: Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Step 4: Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Step 5: Submit your order: Confirm the details and submit your buy order.
- Step 6: Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest?
Should I invest in Datadog?
Before entering a buy transaction in your brokerage account, consider whether investing in Datadog is right for you. Here are some reasons to buy the cloud stock:
- You think Datadog can continue growing its revenue rapidly.
- You believe its stock can outperform the S&P 500 over the next three to five years.
- You like the company's moves to integrate AI into its platform.
- You don't need dividend income right now.
- You think Datadog can grow into its lofty valuation.
- You believe the company can capture a meaningful share of the large and rapidly expanding cloud security total addressable market opportunity.
On the other hand, here are some reasons why you might opt against buying Datadog stock:
- You don't understand what Datadog does.
- You're in or nearing retirement and need dividend income.
- You think Datadog stock is overvalued.
- You're concerned that Datadog's increasing competition could affect its ability to continue growing rapidly.
Profitability
Is Datadog profitable?
Digging into a company's profitability is a vital aspect of investment research. Increasing profitability tends to drive a stock's price higher over the long term.
Datadog is a profitable company. In 2024, the cloud company generated $2.6 billion of revenue (up 26%) and $54 million of operating income (up from a $33 million loss in 2023). The company was even more profitable on a non-GAAP basis. Its non-GAAP operating income was $674 million (up from $490 million in 2023). While Datadog didn't post a GAAP profit in the first quarter of 2025 ($12 million loss), it was still profitable on a non-GAAP basis ($167 million).
The company is also generating strong and growing cash flow. Its operating cash flow was $871 million in 2024, while its free cash flow was $775 million (up from $660 million and $598 million, respectively). This trend continued into early 2025, as the company generated $244 million in free cash flow during the first quarter. Datadog's growing excess free cash is currently piling up on its balance sheet ($4.4 billion of cash, cash equivalents, and marketable securities at the end of the first quarter).
Investors should monitor the company's profitability, which ideally should continue to improve.
Dividend
Does Datadog pay a dividend?
As of mid-2025, Datadog had yet to initiate a dividend. The company is retaining its earnings to fund its growth and maintain a strong financial position.
ETFs with exposure
ETFs with exposure to Datadog
You might prefer a more passive investing approach than directly owning a portfolio of stocks you need to actively manage. Buying an exchange-traded fund (ETF) is a great way to gain some passive exposure to Datadog.
According to ETF.com, 240 ETFs held 51.9 million shares of the cloud company in mid-2025. The largest holder was the Vanguard Total Stock Market ETF (VTI -0.71%) at 9.7 million shares. However, that broad market ETF had a small allocation.
Investors seeking more exposure to Datadog could consider buying a cloud computing ETF. For example, the WisdomTree Cybersecurity Fund (WCBR -1.04%) had a 4.2% portfolio weighting (its fifth-largest holding). The fund provides investors with exposure to companies driving cybersecurity innovation.
Stock splits
Will Datadog stock split?
As of mid-2025, Datadog didn't have an upcoming stock split. The company had yet to complete a stock split since its IPO in late 2019.
Although the company hasn't yet split its stock, it may do so in the future. Shares of the cloud company had gained almost 300% since its IPO and were around $150 per share in mid-2025. If the stock price continues to rise, Datadog might consider a stock split to make its shares more accessible to investors.
Related investing topics
The bottom line
The bottom line on Datadog
Datadog is growing fast as more companies utilize its platform to observe and secure their data. The company is rapidly innovating its platform to integrate AI capabilities, better serving its customers' evolving needs. That growth potential has helped drive the company's stock price higher since its IPO and could continue to power it in the future.
FAQs
Investing in Datadog FAQs
Is Datadog a good stock to buy?
Datadog could be a good stock to buy. The cloud security company is growing rapidly (25% revenue growth in the first quarter of 2025), and it's increasingly profitable. It's in a strong position to continue expanding briskly in the future. The company anticipates the cloud security market to grow at a 16% compound annual growth rate from 2024 ($26 billion) to 2028. Datadog is rapidly innovating its platform to capture a larger share of that massive and growing market opportunity. That growth could drive the stock price higher in the future.
However, there are a couple of negatives that might make Datadog stock not a good buy for you. It traded at a lofty valuation in mid-2025, more than 85 times its forward price-to-earnings (P/E) ratio. That's well above the S&P 500's valuation, which was almost 24 times its forward P/E and the Nasdaq-100, which fetched nearly 29 times forward earnings. As a result, it could be volatile and potentially underperform the market if it fails to meet its lofty growth expectations. Datadog also doesn't pay a dividend.
Given these factors, Datadog is a higher-risk stock, though one with a high upside opportunity if it can continue its rapid growth.
Is Datadog publicly traded?
Yes, Datadog is a publicly traded company. It completed its IPO on September 18, 2019. Datadog trades on the Nasdaq Stock Market under the ticker DDOG.
Does Datadog pay a dividend?
As of mid-2025, Datadog didn't pay a dividend.
Is Datadog profitable?
Yes, Datadog is a profitable company. It reported $54 million of operating income in 2024. While it posted an operating loss of $12 million in the first quarter of 2025, it generated strong free cash flow of $244 million in the period.
