Cloudflare falls 14% and Datadog 13% as software sell-off widens
Key Facts
Cloudflare shares fell 14% in the week ended October 30, closing at $280.70, while Datadog fell 13% to $235.27, according to TIKR. The losses were part of a broader sell-off in software stocks after Fortinet and ServiceNow results prompted investors to reassess their outlook for the sector. In the October 30 session alone, Datadog lost about 11.5% and Cloudflare about 9.5%, according to TIKR. The Nasdaq 100 fell 3.5% in the same session. The performance put both stocks at the center of a wave of pressure that exceeded their weekly losses in a single day, with their quarterly results approaching.
Shares in both companies had fallen over the week from their October 26 closing levels: Datadog dropped from $280.24 to $235.27 on October 30, while Cloudflare fell from $331.86 to $280.70. That trajectory reflects continued selling pressure over the period, rather than a one-off decline at the close. On October 29, Fortinet fell 26% to a five-month low after product revenue growth slowed and it cut its full-year services revenue forecast, according to Reuters. ServiceNow also fell 23% that day, as a third-quarter earnings miss overshadowed higher forecasts for subscription revenue and annual free-cash-flow margin. Reuters said the companies’ results, which fell short of investor expectations, deepened concerns that artificial intelligence could disrupt the sector, but this does not establish that AI directly caused either company’s results.
ServiceNow’s figures show a gap between the company’s operating indicators and the market’s reaction. Subscription revenue reached $3,988 million in the third quarter of 2026, up 21% year over year, according to its official statement. The company said it exceeded the high end of its guidance on key growth and profitability metrics. The stock’s decline, according to Reuters, came after third-quarter earnings missed investor expectations, despite higher forecasts for subscription revenue and annual free-cash-flow margin. Subscription growth thus coincided with a negative share-price reaction, as investors focused on whether results were sufficient against elevated expectations. Fortinet, meanwhile, reported revenue of $2.08 billion in the third quarter, up 20% year over year, and raised its 2026 revenue growth guidance to 20% year over year, according to its investor relations statement.
Cloudflare itself had a company-specific development in the period before the sell-off. TIKR reported that a flaw in one of Workers AI’s models sent 155 responses containing other customers’ data between August 27 and September 9. Cloudflare said it fixed the flaw on September 9 and found no evidence of deliberate exploitation. By contrast, TIKR reported that Datadog had no company-specific news behind its share decline that day. These events give each company a different context within the downturn, but do not by themselves establish the reasons for the stocks’ moves over the week. The October 30 session figures illustrate the breadth of the pressure, with both stocks losing more than the Nasdaq 100 that session.
Attention now turns to the companies’ reports, which will test investor expectations after the sell-off. TIKR cited Cloudflare guidance for third-quarter revenue of between $736 and $737 million, equivalent to 31% year-over-year growth, with expected adjusted earnings per share of $0.34. Cloudflare said it will release results for the quarter ended September 30 after the U.S. market closes on Thursday, November 5, and hold a call to discuss the results at 5 p.m. Eastern time. Its report follows Datadog’s results on November 4, according to the dates cited in the article’s context. Revenue and margins will be central to investors’ focus on the releases, given the companies’ guidance and the market’s sharp reaction to results from other software companies.