Salesforce vs. Datadog: Which Cloud Software Stock Has an Edge?

Salesforce, Inc. CRM and Datadog, Inc. DDOG are two key players in the enterprise cloud software space, benefiting from the ongoing wave of digital transformation and artificial intelligence (AI) adoption. While Salesforce dominates customer relationship management and data platforms, Datadog is a leader in monitoring and observability.

As AI reshapes enterprise software, both companies are betting big on AI to power the next phase of growth. But which stock offers the stronger investment case right now? Let’s break it down.

The Case for Salesforce Stock

Salesforce has long held the top position in the customer relationship management market, according to Gartner. Its strategy is expanding well beyond customer management. The company is building a broader enterprise ecosystem centered on AI, data and collaboration. Acquisitions such as Slack, Informatica, Waii, Bluebirds and Convergence.ai show Salesforce’s effort to create a unified enterprise platform.

AI is now central to Salesforce’s growth story. Since the 2023 rollout of Einstein GPT, Salesforce has been embedding generative AI across its offerings to help companies automate processes, improve decision-making and strengthen customer relationships.

Its latest innovation, Agentforce, is gaining momentum. Combined with Data Cloud, these AI-driven offerings brought in $2.9 billion in recurring revenues in the fourth quarter of fiscal 2026, representing more than 200% year-over-year increase. Agentforce alone generated $800 million in recurring revenues, up 169% year over year. More than 60% of Agentforce deals came from existing clients, showing Salesforce’s success in cross-selling AI features to its user base.

Financially, Salesforce continues to deliver steady performance. In the fourth quarter of fiscal 2026, revenues and non-GAAP earnings per share (EPS) rose 12% and 37% year over year, respectively. Both top and bottom lines surpassed the Zacks Consensus Estimate by 0.32% and 25.69%, respectively.

Salesforce, Inc. Price, Consensus and EPS Surprise

Salesforce, Inc. price-consensus-eps-surprise-chart | Salesforce, Inc. Quote

Salesforce’s last quarterly results signal a reviving double-digit revenue growth trend after several quarters of single-digit top-line increase. Management expects this momentum to continue, projecting 12-13% growth for the first quarter and 10-11% growth for full fiscal 2027. Analyst estimates are also pointing to similar low-double-digit growth for the first quarter and fiscal 2027.

The Case for Datadog Stock

Datadog operates as a unified observability and monitoring platform, enabling enterprises to manage cloud infrastructure as they transition from on-premise systems to hybrid and multi-cloud environments. The company continues to stand out as a high-growth cloud software company benefiting directly from cloud migration and AI adoption. It delivered impressive fourth-quarter 2025 results, with revenues growing 29% year over year and non-GAAP EPS surging 20%.

Datadog, Inc. Price, Consensus and EPS Surprise

Datadog, Inc. price-consensus-eps-surprise-chart | Datadog, Inc. Quote

AI is another major tailwind. Datadog is seeing rapid adoption among AI-native customers and is building tools like AI observability and autonomous agents. Management emphasized that AI workloads are increasing in complexity, which directly boosts demand for observability solutions.

Its biggest strength is its platformization strategy, which supports the consolidation of multiple monitoring tools into a unified system. At the end of the fourth quarter of 2025, 84% of its customers were utilizing over two products, while 55% were deploying over four solutions. The company serves more than 32,700 customers with over 1,000 integrations that connect to various cloud services and applications.

Despite the strengths, management forecasts suggest normalizing sales growth in the near term. The company’s revenue guidance range of $4.06-$4.10 billion for 2026 indicates year-over-year growth of 18-20%, which is significantly lower than the 28% increase registered in 2025. The Zacks Consensus Estimate for 2026 revenues also reflects a year-over-year increase of 19.2%.

The observability market faces intensifying pressure from hyperscaler-native monitoring tools offered by Amazon Web Services, Microsoft Azure and Google Cloud Platform, which are often bundled at lower costs within broader enterprise agreements. Open-source alternatives and established competitors create additional pricing pressures as core monitoring capabilities increasingly commoditize.

How Do Earnings Estimates Compare for CRM & DDOG?

Salesforce and Datadog both have a decent earnings surprise history. CRM surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 11.6%. Datadog also surpassed the consensus mark for earnings in each of the trailing four quarters, the average surprise being 12.8.

However, the Wall Street analysts seem to be more optimistic about Salesforce’s profitability. The long-term (next five years) expected earnings growth for CRM is pegged at 14.2%, significantly higher than DDOG’s 11.6%.

The Zacks Consensus Estimate for Salesforce’s fiscal 2027 and 2028 earnings has been revised upward over the past 30 days. On the other hand, the consensus mark for Datadog’s 2026 and 2027 earnings has been revised downward over the past 60 days.

Salesforce: Analysts’ Earnings Estimate Revision

Image Source: Zacks Investment Research

Datadog: Analysts’ Earnings Estimate Revision

Image Source: Zacks Investment Research

Valuation: CRM Is Cheaper Than DDOG

Comparing the two stocks’ valuations, Datadog currently trades at a higher forward 12-month price-to-sales (P/S) multiple of 10.39 compared to Salesforce’s 3.87. This suggests investors are paying a larger premium for DDOG stock, even though there is a downward revision in earnings estimates.

Image Source: Zacks Investment Research

Conclusion: Salesforce Has an Edge Over Datadog

Both Salesforce and Datadog are formidable forces in the cloud enterprise software market, but Salesforce stands out as the better investment choice today. Salesforce’s accelerated growth in AI, deeply unified platform strategy and superior profitability growth prospects offer a more compelling risk-reward profile.

Though Datadog also offers strong exposure to AI infrastructure trends, its premium valuation and slowing sales growth projections raise concerns. Additionally, downward earnings estimate revisions suggest analysts are turning cautious about its near-term earnings growth potential.

Considering all the factors, Salesforce currently has the edge as the better investment option for investors seeking more favorable risk-adjusted returns.

Salesforce and Datadog carry a Zacks Rank #3 (Hold) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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