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DDOG 4Q25: Change in OpenAI Spending Trend, Again
FUNDA
Expect conservative FY26 guide as OpenAI usage eases and log spend shifts to data lakes; LLM obs ramping.
We spoke with three leading Datadog (DDOG) channel partners and tracked the latest developments in its relationship with OpenAI. Overall, DDOG’s core demand remained resilient in 4Q, with healthy cloud-migration momentum among traditional enterprises that should continue to accelerate into 2026. That said, more customers are evaluating self-built datalake / lakehouse architectures to avoid duplicate spend in log management. On AI, LLM Observability is ramping quickly and is increasingly a prerequisite before enterprises scale AI applications, while early feedback on Bits AI SRE has been more muted than expected post-GA. Separately, OpenAI’s DDOG usage outlook is more conservative versus a few months ago, as improving Chronosphere capabilities reduce reliance on DDOG. We therefore expect initial FY26 guidance to skew conservative, likely in line with buyside expectations.
4Q Results Update And Outlook
North America Channel Expert A
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