Buffett Brain · Research note
Score updated 20 Oct 2026 · analysis from 24 Sept 2026
DDOG· Technology
Datadog
Datadog's high gross margins can't mask its negative ROIC and extreme valuation multiples.
Buffett fit
Weak fit
Owner
30
Durability
27
Management
79
Price
20
Score updated 20 Oct 2026 · analysis from 24 Sept 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If we owned Datadog entirely, we would focus on improving operational efficiency given the negative of -0.67%.
The full reasoning comes with a free account.
Datadog's durability is questionable with a negative of -0.41% and a history of unprofitability over the past five years.
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Datadog has not engaged in , and its share count has increased at a CAGR of 2.96% over the past five years.
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Datadog's valuation is stretched with a ratio of 644.1 and an yield of 1.14%.
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- The 5-year price target and the return it implies
- What would change the call
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1 of 79.9% is top-quintile in the technology sector.
- 2Revenue CAGR of 35.1% over the last five years indicates strong growth.
- 3Current ratio of 3.40 suggests strong short-term financial health.
- 4 of $1B provides liquidity despite operating losses.
Concerns
6- 1 of -0.41% indicates poor capital efficiency.
- 2 of -0.67% points to operational inefficiencies.
- 3 ratio of 644.1 is extremely high, suggesting overvaluation.
- 4Net debt/EBITDA ratio of 3.76 implies risk.
Price history
$260+60.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Datadog provides a SaaS platform for monitoring and analytics, integrating infrastructure monitoring, application performance, and security monitoring. It serves developers and IT teams globally. The company's of 79.9% is top-quintile in its sector, indicating strong . However, the is negative at -0.67%, suggesting inefficiencies in scaling operations.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 20, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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