Datadog, Inc. (DDOG), headquartered in New York, operates an observability and security platform for cloud applications. Valued at $47.6 billion by market cap, the company offers a cloud-based monitoring and analytics platform that integrates and automates infrastructure monitoring, application performance monitoring, and log management for real-time observability of customers. 

Companies worth $10 billion or more are generally described as “large-cap stocks,” and DDOG perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the software - application industry. Datadog's strengths include its cloud-native platform, which handles over 10 trillion events daily and integrates with more than 700 technologies, offering real-time observability and security. The company's commitment to innovation is evident in its consistent rollout of new products and features, such as Application Vulnerability Management and Workflow Automation. This positions Datadog as a leader in the observability and security space, attracting new clients and enhancing value for existing ones.

Despite its notable strength, DDOG slipped 18.5% from its 52-week high of $170.08, achieved on Dec. 6, 2024. Over the past three months, DDOG stock has gained 15.1%, outperforming the S&P 500 Index’s ($SPX) 10.7% gains during the same time frame.

In the longer term, shares of DDOG dipped 3% on a YTD basis, underperforming SPX’s YTD gains of 12.5%. However, the stock climbed 26.9% over the past 52 weeks, outperforming SPX’s solid 17.6% returns over the last year.

To confirm the bullish trend, DDOG has been trading above its 200-day moving average since mid-June, with slight fluctuations. The stock is trading above its 50-day moving average since early May, experiencing some fluctuations. 

On Aug. 7, DDOG shares closed down by 1.8% after reporting its Q2 results. Its adjusted EPS of $0.46 topped Wall Street expectations of $0.41. The company’s revenue was $826.8 million, topping Wall Street forecasts of $790.8 million. DDOG expects full-year adjusted EPS in the range of $1.80 to $1.83, and expects revenue to be between $3.31 billion and $3.32 billion.

In the competitive arena of software - application, Dynatrace, Inc. (DT) has lagged behind DDOG, showing resilience with a 10.6% downtick on a YTD basis and 4.2% losses over the past 52 weeks.

Wall Street analysts are bullish on DDOG’s prospects. The stock has a consensus “Strong Buy” rating from the 41 analysts covering it, and the mean price target of $161.51 suggests a potential upside of 16.5% from current price levels.