What happened?
A number of stocks fell in the morning session after Datadog projected fourth-quarter revenue that implied flat sequential growth, triggering read-through concerns across infrastructure peers.
In a company press release, Datadog reported third-quarter revenue rose 35% year over year to $1.20 billion, topping consensus estimates of $1.15 billion, while adjusted earnings per share reached $0.81. However, the company guided fourth-quarter revenue to between $1.19 billion and $1.20 billion, representing 25% to 26% annual growth but signaling a pause in sequential expansion.
Datadog's consumption model functions as a barometer for enterprise cloud activity. When a high-multiple cloud bellwether guides to flat sequential revenue, this could raise concerns regarding a moderation in enterprise AI and cloud adoption.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Data storage company Snowflake (NYSE: SNOW) fell 2.9%. Is now the time to buy Snowflake? Access our full analysis report here, it’s free.
- Data storage company MongoDB (NASDAQ: MDB) fell 2.9%. Is now the time to buy MongoDB? Access our full analysis report here, it’s free.
- Content delivery company Akamai (NASDAQ: AKAM) fell 3%. Is now the time to buy Akamai? Access our full analysis report here, it’s free.
Zooming in on Akamai (AKAM)
Akamai’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 26.9% on the news that the company reported first-quarter 2026 financial results that met Wall Street's expectations and raised its full-year guidance.
The company's revenue for the quarter grew 5.8% year-over-year to $1.07 billion, and its adjusted earnings per share came in at $1.61, both aligning with analyst forecasts. While Akamai's revenue guidance for the upcoming second quarter fell slightly below consensus estimates, investors appeared to focus on the improved outlook for the full year.
Management lifted its annual revenue forecast to a midpoint of $4.50 billion and raised its adjusted EPS guidance to $6.78. The in-line results and positive adjustment to the annual forecast provided a sense of relief, boosting investor confidence in Akamai's performance.
Akamai is flat since the beginning of the year, and at $84.61 per share, it is trading 47.5% below its 52-week high of $161.14 from May 2026. Investors who bought $1,000 worth of Akamai’s shares 5 years ago would now be looking at only $771.52.
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