In this article, we will take a look at the 5 Cloud Stocks Hedge Funds Are Betting On After a Sharp Selloff. For investors looking for the complete list, you can explore our full report on the 10 Cloud Stocks Hedge Funds Are Betting On After a Sharp Selloff.
5. Datadog Inc. (NASDAQ:DDOG)
Number of Hedge Fund Holders — 92
Value of Holdings — $3.94 billion
Observability Growth Exposes the Gap Between Cash Flow and Earnings
Datadog, Inc. (NASDAQ: DDOG) increased second-quarter 2026 revenue by 36% to $1.12 billion. Customers generating at least $100,000 in annual recurring revenue numbered approximately 4,720, up 23% from about 3,850 a year earlier.
Its observability and security platform helps businesses monitor applications, infrastructure, data, and AI systems. As technology environments become more complex, identifying failures and resolving them quickly can become increasingly valuable.
The operating numbers show both progress and a demanding profitability test. Free cash flow reached $279 million, and operating cash flow totaled $316 million. Yet GAAP operating income was only $5 million, compared with non-GAAP operating income of $257 million.
Management’s full-year revenue guidance was $4.45 billion to $4.47 billion. That outlook offers a concrete benchmark for the next earnings reports, while the expanding large-customer base provides another measure of commercial traction.
For investors researching cloud monitoring stocks, the central issue is whether sustained growth can produce stronger reported operating margins. Cash generation matters, but the large difference between GAAP and adjusted income deserves continued scrutiny.
Ranking Rationale
Datadog, Inc. (NASDAQ: DDOG) ranks fifth with 92 hedge fund holders. Its $3.94 billion combined stake is smaller than those of several lower-ranked entries, illustrating why this list ranks by holder count rather than total dollars invested.
