Datadog (DDOG) stock was trading around 5% higher on Thursday, changing hands near $220.00, after Snowflake's blowout earnings report sparked a broad rally in AI and cloud infrastructure names.

Snowflake posted second-quarter revenue of $1.55 billion, up 35% year over year, topping Wall Street's estimate of $1.48 billion. Product revenue came in at $1.49 billion, a 37% year-over-year increase. Adjusted EPS hit $0.62, well above the consensus estimate of $0.45. Remaining performance obligations rose 30% to $9 billion, a closely watched metric that signals future revenue demand.

Snowflake stock jumped around 22% in extended trading Wednesday after the results. That move spilled over into Thursday's session, lifting names tied to enterprise AI spending. Datadog was one of the clearest beneficiaries. The two companies operate in overlapping parts of the cloud and AI infrastructure market — Datadog provides observability and monitoring software that engineering teams use to track the health of cloud applications and infrastructure, while Snowflake focuses on cloud-based data warehousing and analytics — so investors often trade them together as proxies for enterprise cloud and AI spending.

Snowflake CEO Sridhar Ramaswamy credited AI for driving the outperformance, saying it continues to "compound our advantages, creating a flywheel effect across the business."

Datadog's Recent Slide

Datadog had been under pressure before Thursday's pop. The stock had dropped roughly 22% over the prior month after a major AI customer signaled it expected to use less of Datadog's platform going forward. That kind of demand signal from a large customer tends to raise questions about the growth trajectory, which is why the stock pulled back as sharply as it did. It also highlighted a risk that runs through high-growth software names: when a single customer accounts for a meaningful slice of revenue, changes in that customer's usage patterns can move the whole stock. Thursday's move helped recover a portion of those losses, though the stock remains well off its recent highs.

What Snowflake's Numbers Mean for the Sector

Snowflake's results came in the context of a broader wave of enterprise software earnings, giving investors a clearer read on how companies are actually spending on cloud and AI tools. The numbers suggested that demand in this part of the market remains intact. Revenue growth of 35% at Snowflake's scale is not easy to produce, and the earnings beat was wide enough to suggest the business is executing well.

Datadog's premarket gain of 5.7% reflected how quickly sentiment can shift when a peer company puts up strong numbers in the same spending category. The move also underscores how much of the recent volatility in these stocks has been driven by sentiment around AI budgets rather than reported results from the companies themselves; Datadog's own fundamentals did not change overnight, but the market's read on the health of enterprise AI spending did.

The broader market provided little additional help. The S&P 500 was roughly flat and the Nasdaq was modestly lower on Thursday morning, meaning Datadog's move was driven almost entirely by the Snowflake effect.

At the time of publication, Datadog was trading at $220.00, up 5.15% on the day.

Source: CoinCentral