Executive summary
- Snowflake delivered Q2 FY26 product revenue $1.09B (+32% YoY) and raised product revenue guidance, signaling strong AI-driven demand for its AI Data Cloud (Snowflake press release, Aug 27, 2025). (Question framed: is Snowflake or Datadog a better buy 2025). (Snowflake)
- Datadog reported Q2 2025 revenue $827M (+28% YoY) with $200M operating cash flow and raised full-year guidance earlier in 2025 on AI/security demand (Datadog press release, Aug 7, 2025; Reuters May 6, 2025). (GlobeNewswire)
- Profitability split: Snowflake remains unprofitable on GAAP but posted non-GAAP operating income improvement (non-GAAP operating income $127.6M in Q2 FY26) while Datadog reported positive GAAP-adj free cash flow ($165M FCF in Q2 2025) and non-GAAP operating margin ~20% (Snowflake press release Aug 27, 2025; Datadog press release Aug 7, 2025). (Snowflake)
- Technicals: SNOW RSI ~53 (neutral) and MACD slightly negative; DDOG RSI ~58 (mildly positive) and MACD positive — short-term momentum favors Datadog (Investing.com technical snapshots Sep 2025). (Investing.com)
- One-sentence verdict: is Snowflake or Datadog a better buy 2025 — pick Snowflake if you prioritize platform-level AI exposure and are comfortable with higher headline risk and longer path to consistent GAAP profits; pick Datadog if you want steadier cash generation, faster margin conversion, and shorter-term downside protection from positive free cash flow. (Snowflake)
Summary fundamentals
- Snowflake (SNOW) — Q2 FY26 total revenue ≈ $1.14B (company reported revenue and product revenue figures; product revenue $1.09B, +32% YoY); non-GAAP operating income $127.6M; product gross profit $788.2M (Aug 27, 2025). Market cap ≈ $76B (Sept 2025 market snapshots). (Snowflake press release, Aug 27, 2025; CompaniesMarketCap snapshot Sep 2025). (Snowflake)
- Datadog (DDOG) — Q2 2025 revenue $827M (+28% YoY); GAAP operating loss $(36)M; non-GAAP operating income $164M; operating cash flow $200M and free cash flow $165M in Q2 (Aug 7, 2025). Market cap ≈ $48.5B (Sept 2025). (Datadog press release, Aug 7, 2025; CompaniesMarketCap Sep 2025). (GlobeNewswire)
Additional snapshot metrics (each cited above): net revenue retention SNOW 125% (Jul 31, 2025); Datadog ~3,850 customers with >$100k ARR (Jun 30, 2025) (Snowflake IR; Datadog press release). (investors.snowflake.com)
Detailed fundamental analysis
Revenue trends
Snowflake’s product revenue growth accelerated to 32% YoY as enterprises scale data and AI workloads on its platform (product revenue $1.09B; Snowflake press release Aug 27, 2025). Snowflake’s remaining performance obligations (RPO) of $6.9B provides multi-quarter visibility into product services (Snowflake press release Aug 27, 2025). (Snowflake)
Datadog’s revenue grew 28% YoY to $827M in Q2 2025, driven by larger customers and new product adoption (DASH 2025 launches boosted sales). Datadog reported strong growth in $100k+ ARR customers (approx. 3,850), indicating healthy expansion in enterprise telemetry and security spend (Datadog press release Aug 7, 2025). (GlobeNewswire)
Margin drivers and profitability
Snowflake’s product gross profit ($788.2M) and improving non-GAAP operating income ($127.6M) show margin leverage as product revenue scales; however GAAP operating loss persists due to stock-based comp and expansion investments (Snowflake press release Aug 27, 2025). (Snowflake)
Datadog runs a more mature SaaS margin profile: Q2 non-GAAP operating margin ~20% with positive free cash flow ($165M), reflecting operational scale and tighter cloud hosting cost control (Datadog press release Aug 7, 2025). Datadog’s margin trajectory and immediate cash generation reduce short-term cash risk compared with Snowflake. (GlobeNewswire)
Balance-sheet strength and capital allocation
Snowflake reported net cash provided by operating activities $74.9M in the quarter (lower cash conversion than Datadog) but holds RPO providing future revenue visibility; Snowflake’s investments center on AI capabilities and partner ecosystem expansion (Snowflake press release Aug 27, 2025). (TradingView)
Datadog’s $3.9B cash and marketable securities and positive FCF provide flexibility for product investment and M&A (Datadog press release Aug 7, 2025). Datadog has used acquisitions and internal R&D to expand its observability and security stack — an operating model that converts revenue into cash faster than Snowflake’s compute-dependent model. (GlobeNewswire)
Valuation multiples
Market caps (Sept 2025 snapshots): Snowflake ≈ $76B, Datadog ≈ $48.5B — Snowflake trades at a higher revenue multiple driven by AI Data Cloud optionality (CompaniesMarketCap snapshots Sep 2025). Use live-forward revenue or EV/Revenue figures for precise multiples; publicly reported guidance and product revenue growth should feed valuation models. (Piaci Kapitalizációs Társaságok)
Momentum & technical snapshot
(Technical sources: Investing.com and TipRanks; figures are current as of Sep 26–28, 2025.)
- Snowflake (SNOW) — RSI(14): ~52.9 (neutral); MACD: -0.16 (MACD below signal, mild sell signal); 50-day SMA ≈ 224.6; 200-day SMA near lower values; 1-month return ~+X% vs Nasdaq (see provider snapshot). (Investing.com SNOW technicals Aug/Sep 2025; TipRanks). (Investing.com)
- Datadog (DDOG) — RSI(14): ~57.9 (mild buy); MACD: +0.59 (MACD above signal); 50-day SMA ≈ 137.2; 200-day SMA lower; 1-month return modestly positive; average daily dollar volume large (~$1.7B/day at current price). (Investing.com DDOG technicals Sep 2025; CompaniesMarketCap market cap). (Investing.com)
Interpretation: short-term technical momentum slightly favors Datadog; Snowflake sits in neutral territory after an earnings-driven move, so traders should confirm breakouts with volume. (Investing.com)
Peer comparison
Direct peers: Databricks (private) and Confluent (CFLT) (public comparable for data streaming) for Snowflake; New Relic (NEWR) and Splunk (SPLK) for Datadog. Public peer table (rounded metrics from recent filings/press):
| Company | Latest revenue growth | Gross margin / Op margin | Debt/equity | Forward multiple (approx) |
|---|---|---|---|---|
| Snowflake (SNOW) | +32% product revenue (Q2 FY26). (Snowflake) | Product gross margin ~72%; non-GAAP op margin ~11% (Q2). | Low net debt; growth investment heavy. | Premium growth multiple vs peers (market data). |
| Datadog (DDOG) | +28% revenue (Q2 2025). | Non-GAAP op margin ~20%; positive FCF ($165M). | Low leverage; cash $3.9B. | Moderate multiple vs Snowflake (market data). |
| Confluent (CFLT) | mid-20s growth, streaming data focus (public filings). | Gross margin high for SaaS; operating losses historically. | Moderate leverage. | Lower multiple than Snowflake. |
(Sources: Snowflake press release Aug 27, 2025; Datadog press release Aug 7, 2025; public filings). (Snowflake)
Latest earnings highlights & management guidance
- Snowflake Q2 FY26 (Aug 27, 2025): product revenue $1.0905B (+32% YoY); non-GAAP operating income $127.6M; net revenue retention 125%; RPO $6.9B; company raised product revenue guidance for FY26. (Snowflake press release, Aug 27, 2025). (Snowflake)
- Datadog Q2 2025 (Aug 7, 2025): revenue $826.76M (+28% YoY); GAAP operating loss $(36)M; non-GAAP operating income $164M; operating cash flow $200M; guidance Q3 revenue $847–851M, FY revenue $3.312–3.322B. (Datadog press release, Aug 7, 2025). (GlobeNewswire)
(Verbatim management quotes ≤25 words each)
- Snowflake CEO: “AI adoption continues to drive product revenue and customer expansion” (company earnings remarks, Aug 27, 2025). (Fool)
- Datadog CEO: “Datadog had a strong second quarter, with 28% year-over-year revenue growth.” (Datadog press release, Aug 7, 2025). (GlobeNewswire)
Strategic moves, catalysts & risks (from filings/news)
Snowflake catalysts & risks
- Catalysts: Snowflake’s AI product launches, partnerships (e.g., integrations for LLMs), and rising large-customer penetration (654 customers > $1M product revenue) are material growth drivers (Snowflake press release Aug 27, 2025). (investors.snowflake.com)
- Risks: compute costs, competition from hyperscaler data services, and heavy investment requirements could compress margins or slow cash conversion (market analysis and Snowflake GAAP operating loss). (Snowflake)
Datadog catalysts & risks
- Catalysts: product expansion showcased at DASH 2025 (125+ product updates including AI agents), improved security/observability demand, and FedRAMP High progress for public sector expansion (Datadog press release Aug 7, 2025). (GlobeNewswire)
- Risks: pricing pressures, cloud-hosting cost inflation, and competition from vendors bundling observability into cloud stacks (market commentary). Datadog mitigates via product breadth and cost controls. (Reuters)
Valuation & scenario analysis
Assumptions: use reported revenue and cash flows; apply conservative/base/optimistic multiples guided by growth and margin scenarios.
Snowflake
- Conservative: product revenue growth slows to +15% next 12 months; non-GAAP margin contraction → implied downside −30% (multiple compression). (Snowflake Q2 data). (Snowflake)
- Base: maintain ~30% product revenue growth; margin improvement to low double-digit operating income → price roughly flat to +15% if market rewards AI adoption. (Snowflake)
- Optimistic: Snowflake captures substantial AI workloads, revenue +40% and margin expansion → upside +40–70% (requires sustained enterprise reorder behavior). (Investopedia)
Datadog
- Conservative: growth slows to +12% and cloud hosting costs rise → downside −15%. (GlobeNewswire)
- Base: maintain ~25–30% growth and FCF conversion → moderate upside +10–30% (valuation re-rating as margins expand). (GlobeNewswire)
- Optimistic: Datadog’s AI agent products and security lead to accelerated enterprise adoption → upside +30–60%. (GlobeNewswire)
These ranges are directional; execute a DCF or EV/revenue sensitivity model with live price for exact targets.
Trading checklist & signals
Momentum traders (short-term)
- Snowflake entry: wait for daily close above 50-day SMA (~224.6) with volume >1.5× 30-day average and MACD crossover (confirm on Investing.com/TradingView). (Investing.com SNOW technicals). (Investing.com)
- Datadog entry: price hold above 50-day SMA (≈137) with RSI >55 and MACD positive; volume confirmation required. (Investing.com DDOG technicals). (Investing.com)
- Stops: 6–10% below entry or below 200-day SMA for swing trades.
Longer-term investors (fundamental checklist)
- Snowflake buy checklist: two consecutive quarters of product revenue acceleration, improving non-GAAP operating margins, and stabilization of operating cash flow conversion to >5–7% of revenue. (Snowflake Q2 metrics). (Snowflake)
- Datadog buy checklist: continued expansion of $100k+ ARR customers, stable non-GAAP margins >20%, and FCF margin ≥10% for multiple quarters. (Datadog Q2 metrics). (GlobeNewswire)
