After ServiceNow’s 50% Plunge, Datadog Gains on Estimate Revisions
After ServiceNow plunged 50% from its $211 peak to $102 despite 22% subscription revenue growth, peers like Datadog have seen shares rise following multiple upward revisions to near-term earnings estimates. Analysts’ estimate upgrades signal strengthening demand for cloud monitoring services across the enterprise sector.
1. Sector AI Valuation Pressure
Enterprise software providers are under scrutiny as fears of agentic AI replacing per-seat human workflows pressure valuations. Companies with per-user pricing face investor concern over potential margin erosion, prompting renewed focus on AI-driven revenue diversification.
2. ServiceNow’s Steep Decline
ServiceNow shares sank roughly 50% from a $211 high to about $102, despite subscription revenues rising 22% to $3.67 billion in Q1 and EPS of $0.97 beating $0.80 estimates. The stock is down 31% year-to-date, trading at a 61x P/E versus a seven-year average above 299x.
3. Datadog’s Estimate-Driven Rally
Datadog shares have started a rally as analysts lifted near-term earnings forecasts on signs of robust cloud monitoring adoption. The upward revisions reflect stronger demand metrics, positioning the stock for potential further gains ahead of its next earnings report.