Datadog surged 31% on Thursday after reporting blockbuster earnings and raising its annual guidance, showing how other software names are starting to make their case as winners in artificial intelligence.
Quarterly revenue hits $1 billion for the first time.
Pop fueled the gatherings with assignments of Snowflake again MongoDBeach increased by 10%.
Datadog provides the cloud infrastructure that AI models from OpenAI and Anthropic run on. According to analysts, OpenAI is its biggest customer.
Datadog CEO Olivier Pomel revealed on an earnings call that the company acquired two large hyperscaler customers to train their intelligence labs.
“This was an eye-opener,” wrote Andrew Sherman, an analyst at TD Securities, who called it “a must-own stock.”
The positivity surrounding Datadog follows the strong benefits from it Twilio last week.
Investors say the performance of Datadog and Twilio underscores that companies that can use AI-native solutions while figuring out how to make money can ease fears of disruption, for now.
At Twilio’s annual conference on Wednesday, the communications software company unveiled new platform capabilities that help AI agents communicate and work together more effectively. Updates include logging customer data, facilitating referrals and creating actionable data lists.
Twilio CEO Khozema Shipchandler told CNBC that these enhancements will improve the customer experience by making agents better at solving customer problems.
Experts say armed agents with in-memory capabilities will make customer calls less difficult for the end user.
The technology will help in situations where one person is calling an airline, talking to an agent while solving a problem, and then the call is dropped. If the agent is able to save the information so that the caller can continue the conversation from the moment they hang up, the customer ultimately saves time and money.
“We’re not only lowering their costs, not just serving more consumers, but we’re actually increasing the revenue stream,” Shipchandler said.
Despite continued pressure on the software industry, Twilio has managed to gain investor confidence, with shares up nearly 50% in the past month, outperforming other components of the IGV Software ETF.
Twilio’s stock appreciation follows the release of strong quarterly earnings in which it posted its highest revenue growth in more than three years. Voice revenue in the first quarter grew 20% from a year ago.
“[Twilio] distinguishes itself by the breadth of its communication channels and the volume of customer data it inhabits,” wrote Rishi Jaluria, an analyst at RBC Capital, in a note to investors following the company’s investor day.
Shipchandler told CNBC that new products are closer to dominance and visibility.
