Artificial intelligence (AI) agents are becoming a very important talking point in the world of technology. By using AI agents, businesses have the opportunity to automate workflows that are repeatable and cost-effective. The perceived benefits of this are twofold: reducing costs and spending more time on higher-value activities.
However, AI agents are unlikely to see major breakthroughs overnight. Instead, organizations will look to install them more carefully over time, prioritizing the need to effectively monitor and improve their performance.
This is where two important stocks come in: Datadog NASDAQ: DDOG and Dynatrace NYSE: DT. Their visualization platforms provide the tools needed to deploy AI agents at scale. Notably, both of these software stocks faced significant pressure in late 2025 to early 2026, caught up in general software sales. However, recently, Datadog has moved, while Dynatrace is sitting near its 52-week low.
Given this, does one name clearly represent a better opportunity than the other? Let’s examine both companies’ recent earnings reports, estimates, and analyst takes to examine this question.
Datadog Takes Flight After Very Impressive Q1 Report
In May, Datadog went from hit to hit for a long time. In early April, Datadog was down 47 percent from its 52-week high. Shares are now up more than 50% in May, closing at unprecedented levels above $200 per share. The biggest contributor to this was Datadog’s blockbuster Q1 2026 earnings report.
Datadog Today
As of 05/15/2026 04:00 PM Eastern
- 52 week interval
- $98.01
▼
$211.28
- The P/E ratio
- 547.33
- Target Value
- $213.38
The company saw revenue grow by 32.1% year-over-year (YOY) to just over $1 billion. Growth has grown favorably from 29% YOY in the last quarter and 25% YOY in the previous year. Adjusted earnings per share rose 30% to 60 cents. Both figures beat analysts’ expectations of $960 million and 51 cents, respectively.
Adjusted operating margin remained stable at 22%, and the company significantly improved its full-year sales and adjusted earnings per share (EPS). Notably, Datadog received FedRAMP High certification from the US federal government. This gives the company the ability to target federal agency clients that handle highly sensitive government data. Ultimately, this report allowed Datadog shares to grow more than 31% in one day.
Datadog also received a significant increase in target analytics following its report. Among analysts’ reviews for which MarketBeat has previous price target data, the average target rose 27%.
The MarketBeat consensus price target on Datadog is now near $213, which means about 5% upside. The average target among reviews is only moderately high, around $222. This figure represents an increase of close to 10%.
Dynatrace Sinks into Discouraging Growth Despite Strong Profits
Meanwhile, rival Dynatrace has yet to recover. The stock is trading below $40 and is up only modestly from a 52-week low near $32. Shares remain down more than 35% from highs reached in February 2025 of around $62.
Dynatrace Today
Dynatrace
- 52 week interval
- $31.64
▼
$57.55
- The P/E ratio
- 71.04
- Target Value
- $46.50
The reaction to Dynatrace’s report was the opposite of Datadog’s. Shares fell more than 11% on the day of the release. However, the stock recovered nearly 7% the next day, suggesting that some investors viewed the initial reaction as too negative.
Shares fell even though Dynatrace also beat estimates on sales and adjusted EPS. Revenue increased 19% YOY (16% on a constant basis) to $531.72 million, $10.7 million ahead of expectations. Adjusted EPS improved 24% YOY to 41 cents, above estimates of 39 cents. Dynatrace’s adjusted operating margin was 27%.
Dynatrace also provided guidance for its fiscal year 2027 (FY2027). The company just completed its FY2026, and its fiscal reporting period was several quarters ahead of the regular calendar reporting period. It expects to generate sales of $2.33 billion in the quarter and adjusted EPS of $1.94 in the quarter. These figures would imply growth of around 15% YOY and 14% YOY, respectively.
The revised target when MarketBeat has previous data was favorably lowered by an average of 9% after the report. The average revised target remains near $44, on average below the MarketBeat consensus target near $47. This revised average target means about 15% upside.
Datadog and Dynatrace: High Growth vs. Stressful Measurement
Datadog and Dynatrace are opposite sides of the same coin. Dynatrace has a higher fixed performance limit than Datadog. However, growth is predicted to slow to a much smaller base compared to Datadog, while revenue at Datadog is large and growth is accelerating. In general, technology markets favor high growth over profitability, as gaining market share is one of the most important determinants of long-term success.
However, the valuation gap between the two names is clear, with Datadog’s forward P/E four times higher than Dynatrace’s. Given these factors, no stock seems better positioned for success than another. Datadog has a premium valuation, but this is not out of place given its fundamentals.
Meanwhile, since agent AI has the potential to be a long-term tailwind for both companies, it’s possible that Dynatrace’s growth could be positive in the future. Dynatrace looks like a value play, while Datadog is a high growth momentum option. Participating in both sides of the coin can be a sound strategy.
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