DDOG · Earnings call · 2026Q2T · Full report

AI Monitoring Demand

Datadog, Inc. · 2026-08-06 · Importance 46 · Surprise 56

Datadog said volume for its AI monitoring tool was very limited a year ago but began growing substantially in the second half of the prior year. Usage accelerated rapidly over the past couple of quarters, with management describing an explosion in monitoring volume. Demand came from both traditional companies and newer AI-native companies, including enterprises deploying open-source AI tools. Management expects the product, usage model, and packaging to continue changing because the category remains early.

Key facts

• MCP tool calls quadrupling again quarter-over-quarter and growing more than 22x compared to Q4 2025
• Volume for the AI monitoring tool started growing quite a bit into the second half of last year and has been very rapidly accelerating over the past couple of quarters.