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Datadog Acquires Adaptive ML to Pioneer RLOps: What's Ahead?
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Key Takeaways
Datadog acquired Adaptive ML to add RLOps technology to its AI Research for specialized AI models.
DDOG topped $1B in Q1 2026 revenue as AI cohorts helped drive customer and bookings growth.
Datadog raised full-year 2026 revenue guidance after expanding AI capabilities and research investment.
Datadog (DDOG - Free Report) is deepening its bet on artificial intelligence with the acquisition of Adaptive ML, a startup building what the company describes as the world's first Reinforcement Learning Operations (RLOps) platform. Announced on June 30, 2026, the deal brings Adaptive ML into Datadog AI Research, the company's dedicated lab for advancing world models and agentic large language model post-training. The move gives enterprises using Datadog's platform a new pathway to build, own, and continuously improve their own specialized AI agents and models.
The acquisition builds on momentum from Datadog's June 9, 2026, announcement of over 100 new capabilities aimed at helping customers manage AI and security complexity, and follows the company's FedRAMP High certification for its government offering earlier this year. By folding Adaptive ML's RLOps technology into its research arm, Datadog is positioning observability data as fuel for training specialized AI agents, extending its dual strategy of applying AI internally while building end-to-end observability for customers' AI stacks.
The strategic logic is backed by solid underlying performance. Datadog's first-quarter 2026 results, released on May 7, 2026, showed revenues climbing 32% year over year to $1,006 million, its first quarter above the $1 billion mark. The customer base generating at least $100,000 in annual recurring revenue grew to roughly 4,550, up from about 3,770 a year earlier, while new logo annualized bookings set an all-time record. Management noted that AI-related cohorts drove much of this acceleration, with about 20% of customers, representing 80% of ARR, now using AI integrations.
Looking ahead, Datadog guided second-quarter 2026 revenues to $1.07-$1.08 billion, implying 29-31% year-over-year growth, with non-GAAP operating income of $225-$235 million. For the full fiscal year, the company raised its outlook to $4.3-$4.34 billion in revenues, indicating 25-27% growth, with non-GAAP earnings per share projected between $2.36 and $2.44. With R&D investment exceeding $1 billion annually, the Adaptive ML deal reinforces Datadog's intent to convert expanding AI research capacity into durable product differentiation.
How Competitors Compare on AI-Driven Observability
Datadog's push into RLOps places it alongside Dynatrace (DT - Free Report) and Elastic (ESTC - Free Report) in the race to embed AI deeper into observability platforms. Dynatrace has centered its strategy on its Davis AI engine, pairing causal and generative AI to automate root-cause analysis across enterprise environments. Elastic, meanwhile, has focused on integrating AI-driven search and vector database capabilities into its observability and security offerings. While Dynatrace emphasizes automation for large enterprises and Elastic leans on open, search-based architecture, neither Dynatrace nor Elastic has announced an RLOps-specific acquisition comparable to Datadog's move with Adaptive ML.
DDOG’s Price Performance, Valuation & Estimates
Shares of Datadog have appreciated 91.5% year to date, outperforming the Zacks Computer and Technology sector’s return of 18.3%.
DDOG Stock’s Price Performance
Image Source: Zacks Investment Research
Datadog is trading at a forward 12-month price-to-sales multiple of 19.45 compared with the broader Zacks Internet - Software industry’s multiple of 3.66, suggesting a stretched valuation. DDOG carries a Value Score of F.
DDOG’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDOG’s 2026 earnings is pegged at $2.41 per share, indicating a 17.56% increase from 2025’s reported figure.
View the Zacks #1 Rank List
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Datadog Acquires Adaptive ML to Pioneer RLOps: What's Ahead?
Key Takeaways
Datadog (DDOG - Free Report) is deepening its bet on artificial intelligence with the acquisition of Adaptive ML, a startup building what the company describes as the world's first Reinforcement Learning Operations (RLOps) platform. Announced on June 30, 2026, the deal brings Adaptive ML into Datadog AI Research, the company's dedicated lab for advancing world models and agentic large language model post-training. The move gives enterprises using Datadog's platform a new pathway to build, own, and continuously improve their own specialized AI agents and models.
The acquisition builds on momentum from Datadog's June 9, 2026, announcement of over 100 new capabilities aimed at helping customers manage AI and security complexity, and follows the company's FedRAMP High certification for its government offering earlier this year. By folding Adaptive ML's RLOps technology into its research arm, Datadog is positioning observability data as fuel for training specialized AI agents, extending its dual strategy of applying AI internally while building end-to-end observability for customers' AI stacks.
The strategic logic is backed by solid underlying performance. Datadog's first-quarter 2026 results, released on May 7, 2026, showed revenues climbing 32% year over year to $1,006 million, its first quarter above the $1 billion mark. The customer base generating at least $100,000 in annual recurring revenue grew to roughly 4,550, up from about 3,770 a year earlier, while new logo annualized bookings set an all-time record. Management noted that AI-related cohorts drove much of this acceleration, with about 20% of customers, representing 80% of ARR, now using AI integrations.
Looking ahead, Datadog guided second-quarter 2026 revenues to $1.07-$1.08 billion, implying 29-31% year-over-year growth, with non-GAAP operating income of $225-$235 million. For the full fiscal year, the company raised its outlook to $4.3-$4.34 billion in revenues, indicating 25-27% growth, with non-GAAP earnings per share projected between $2.36 and $2.44. With R&D investment exceeding $1 billion annually, the Adaptive ML deal reinforces Datadog's intent to convert expanding AI research capacity into durable product differentiation.
How Competitors Compare on AI-Driven Observability
Datadog's push into RLOps places it alongside Dynatrace (DT - Free Report) and Elastic (ESTC - Free Report) in the race to embed AI deeper into observability platforms. Dynatrace has centered its strategy on its Davis AI engine, pairing causal and generative AI to automate root-cause analysis across enterprise environments. Elastic, meanwhile, has focused on integrating AI-driven search and vector database capabilities into its observability and security offerings. While Dynatrace emphasizes automation for large enterprises and Elastic leans on open, search-based architecture, neither Dynatrace nor Elastic has announced an RLOps-specific acquisition comparable to Datadog's move with Adaptive ML.
DDOG’s Price Performance, Valuation & Estimates
Shares of Datadog have appreciated 91.5% year to date, outperforming the Zacks Computer and Technology sector’s return of 18.3%.
DDOG Stock’s Price Performance
Image Source: Zacks Investment Research
Datadog is trading at a forward 12-month price-to-sales multiple of 19.45 compared with the broader Zacks Internet - Software industry’s multiple of 3.66, suggesting a stretched valuation. DDOG carries a Value Score of F.
DDOG’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DDOG’s 2026 earnings is pegged at $2.41 per share, indicating a 17.56% increase from 2025’s reported figure.
Datadog, Inc. Price and Consensus
Datadog, Inc. price-consensus-chart | Datadog, Inc. Quote
Datadog currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.