What Happened?
Shares of cloud monitoring platform Datadog (NASDAQ: DDOG) jumped 5.5% in the morning session after Nvidia CEO Jensen Huang dismissed fears that artificial intelligence would cannibalize the enterprise software sector.
High-growth names like Zscaler (ZS) and CrowdStrike (CRWD) saw significant rebounds as investors reassessed the "AI headwind" narrative that had previously weighed on valuations. Huang's comments acted as a powerful catalyst, signaling that the intersection of generative AI and established software platforms is a symbiotic relationship rather than a zero-sum game. During a CNBC appearance, Huang argued that the market "got it wrong," specifically defending the indispensable role of platforms like ServiceNow. He emphasized that these companies are uniquely positioned to deploy fine-tuned AI agents that utilize their existing specialized tools.
After the initial pop the shares cooled down to $114.47, up 3.7% from previous close.
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What Is The Market Telling Us
Datadog’s shares are very volatile and have had 24 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 previous big move we wrote about was 3 days ago when the stock dropped 11.6% on the news that the White House announced plans to raise global tariffs to 15%. The major stock indexes, including the S&P 500 and Nasdaq, also sank amid the uncertainty. The downturn came after President Trump announced the tariff increase in a post on Truth Social, stating the new rate would be effective immediately on countries that had been, in his words, "'ripping' the U.S. off for decades." The move sparked concern among trade partners, with Europe warning that such tariffs could put U.S. trade deals at risk. The market-wide slide reflected investor worries about the potential impact of these new global trade policies Additionally, investor concerns about disruption in the software industry from advancements in artificial intelligence (AI) continued to cause a sector-wide sell-off. The market started the week with a more cautious tone, reflecting this unease. The current wave of AI development was seen as having similar traits to previous tech cycles, marked by genuine innovation but also by exuberant expectations and sharp market reactions to new developments.
Datadog is down 14.4% since the beginning of the year, and at $114.47 per share, it is trading 42.7% below its 52-week high of $199.72 from November 2025. Investors who bought $1,000 worth of Datadog’s shares 5 years ago would now be looking at an investment worth $1,200.
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