Datadog Plunges 19% on Earnings as SoundHound Surges on Record Q2

Datadog Inc. shed 19% on Thursday after free cash flow margins contracted to 25% from 29% a year earlier, spooking investors even as Q2 revenue came in at a record $1.12 billion and full-year guidance was lifted. The S&P 500 slipped 0.18% to close at 7,709.96, the Nasdaq Composite drifted 0.06% lower to 26,348, and the Philadelphia Semiconductor ETF SOXX ended fractionally higher at +0.34%, masking deep cross-currents in the AI stocks today session.

Top AI stocks today: August 6, 2026

Datadog tumbles 19% despite record Q2 revenue

Datadog Inc. (NASDAQ: DDOG) reported Q2 2026 results on August 6 that beat on nearly every headline metric, yet the stock suffered its worst single-day decline in over a year. Revenue reached $1.12 billion, up 36% year over year and above the $1.08 billion consensus estimate, while earnings per share of $0.65 topped the $0.58 expected. Management raised full-year revenue guidance to $4.45 billion to $4.47 billion. The problem, according to TradingKey analysis published August 6, was a contraction in free cash flow margin from 29% a year ago to 25% this quarter. In an environment where investors are stress-testing AI software valuations, even a modest margin step-down on a high-multiple name triggers outsized selling. Customers paying $100,000 or more annually rose 23% to roughly 4,720, a healthy cohort expansion that was not enough to offset the FCF narrative. Across the more than 3,500 developer-tools and data-infrastructure companies tracked by StartupHub.ai, the observability segment remains one of the most densely contested, with Datadog still the clear revenue leader at public-company scale, making any deceleration in unit economics immediately consequential for the peer set. AI stocks to watch: the next test for DDOG is whether FCF margins recover in Q3; the print is expected in early November.

SoundHound AI surges 10% after record Q2 and raised full-year outlook

SoundHound AI Inc. (NASDAQ: SOUN) was the session's standout gainer, climbing 10.11% to close at $7.08 after posting record quarterly revenue of $61.9 million, up 45% year over year, and reporting an adjusted loss per share of $0.02 versus the $0.05 loss expected by analysts. Management raised full-year 2026 revenue guidance to $230 million to $260 million and said the company is targeting combined revenue of at least $350 million to $400 million in 2027 after the pending LivePerson acquisition closes, per StocksToTrade on August 6. A new Deliverect partnership will plug SoundHound's Smart Ordering voice AI into more than 80,000 restaurant locations across 100-plus languages, a distribution channel that speaks directly to the restaurant vertical where the company has built its densest enterprise relationships. StartupHub.ai tracks more than 2,800 NLP and voice AI companies globally; SoundHound is one of the handful that has crossed nine-figure annualized revenue, putting it in a small subset of companies in this space that have cleared the commercialization threshold. The stock is still down 33% year to date after a volatile 2026, so today's move represents the first clean fundamental catalyst of the year. For investors researching the best AI stocks to buy in August 2026, SoundHound's improving unit economics and expanding enterprise deployments make it one of the more data-backed cases in the small-cap AI universe.

ARM Holdings extends post-earnings climb above $286

ARM Holdings plc (NASDAQ: ARM) added 4.41% to close at $286.68, extending the post-earnings run that began after the company reported Q4 FY2026 results in late July. Revenue reached $1.49 billion in that print, up 20% year over year, with licensing revenue of $819 million growing 29%, driven by migration to the higher-margin Armv9 architecture, per the company's earnings call transcript via Investing.com. ARM shares surged 18% above $280 on the initial earnings reaction, per FX Leaders. Thursday's continued drift higher on below-average volume reflects the absence of a counter-narrative: chip IP licensing economics are straightforward to model, guidance was clean, and demand from AI data centers pulling Armv9-based compute designs remains the multi-year thesis. For best AI chip stocks to watch, ARM remains the architectural throughline: nearly every chip targeting AI inference, from custom silicon at the hyperscalers to automotive processors, runs on ARM instruction sets. The stock's premium multiple prices in substantial royalty ramp through 2028; that valuation compression risk remains the principal watch item.

Notable but quieter

Microsoft Corp. (NASDAQ: MSFT) gained 2.54% to $499.86, a notable outperformer and the clearest signal that Magnificent 7 AI stocks are not moving in lockstep: while DDOG sold off on margin concerns, MSFT continues to benefit from Azure AI Copilot revenue ramp. Dell Technologies Inc. (NYSE: DELL) fell 5.41% to $437.65 on heavy volume; the AI server infrastructure name is up 242% year to date, making it one of the top 2026 AI stocks by total return, so profit-taking during a soft AI infrastructure stocks session is not unusual. CoreWeave Inc. (NASDAQ: CRWV) retreated 5.07% to $85.33, giving back some of the 18.9% five-day gain; the AI compute cloud is still building cluster capacity and its share price frequently tracks GPU-availability sentiment. monday.com Ltd. (NASDAQ: MNDY) dropped 4.24% to $87.57, caught in the enterprise SaaS selloff alongside Salesforce.com Inc. (NYSE: CRM), which fell 3.22% to $186.77; both names have the same next catalyst of AI-agent monetization appearing in bookings data. Cloudflare Inc. (NYSE: NET) pulled back 2.91% to $284.43 on no company-specific news, following the broader software group lower.

What to watch tomorrow

IonQ Inc. and D-Wave Quantum Inc. report next week, adding a quantum-computing dimension to the AI stocks to watch list. Any Federal Reserve commentary on rate trajectory is worth monitoring: high-multiple AI infrastructure stocks re-priced sharply on Fed signals earlier in 2026. For Salesforce, ServiceNow Inc. (NYSE: NOW), and monday.com, the next earnings cycle in late October is where AI-agent seat adoption in enterprise contracts will be the deciding data point. On the chip side, Taiwan Semiconductor Manufacturing Co. (NYSE: TSM) monthly revenue disclosures are the next hard number on AI chip stocks demand, expected mid-September.

Not investment advice.

What are the top AI stocks to buy in August 2026?

Across hardware, hyperscale cloud, and enterprise SaaS, the consensus top AI stocks in August 2026 include ARM Holdings (ARM) and NVIDIA Corp. (NVDA) on the chip side; Microsoft (MSFT) and Alphabet (GOOGL) for hyperscale AI infrastructure; and Palantir Technologies (PLTR) for enterprise AI software. Wall Street's 2026 focus has shifted from training-cluster buildout to inference economics and AI-agent seat monetization, reshuffling which top 2026 AI stocks lead each session and creating sharp intraday divergence between names with proven unit economics and those still building toward it.

Core watchlist

Chips

NVIDIA Corp. (NVDA): -0.10% on 113M shares. Flat after a strong 5-day run of +9.1%; the Blackwell shipment cadence and inference-cluster orders remain the entire investment thesis. Advanced Micro Devices Inc. (AMD): +1.50% on average volume. The data-center GPU ramp is the clearest alternative to NVDA in AI chip stocks; next catalyst is the Q3 print, expected late October. Broadcom Inc. (AVGO): +0.55% on light volume. Custom ASIC pipeline for hyperscaler AI training and inference chips; the stock is up 21% year to date. Taiwan Semiconductor Manufacturing Co. (TSM): +1.01% on average volume. The foundry throughline for every AI chip stock; N3 capacity utilization and CoWoS packaging constraints are the metrics to watch.

Hyperscalers

Microsoft Corp. (MSFT): +2.54% on heavy volume. Azure AI and Copilot seat adoption make this the largest-cap way to own the AI infrastructure buildout. Alphabet Inc. (GOOGL): -1.29% on average volume. Google Cloud AI revenue ramp is the bull case; the stock is up 13.5% year to date. Meta Platforms Inc. (META): +0.19% on light volume. Llama open-source strategy and AI ad-targeting improvements are the twin drivers; the stock is -9.3% year to date, an outlier among Magnificent 7 AI stocks. Amazon.com Inc. (AMZN): -0.14% on average volume. AWS Bedrock and Trainium-based services are gaining enterprise traction; up 20.2% year to date.

Enterprise SaaS

Oracle Corp. (ORCL): -0.64% on above-average volume. OCI AI infrastructure buildout is the reinvention narrative; database installed base is the moat that underpins the AI pivot. Salesforce.com Inc. (CRM): -3.22% on average volume. Agentforce monetization is the entire thesis; down 26% year to date, the multiple has compressed to a level where a clean Q3 Agentforce booking number could inflect the chart. ServiceNow Inc. (NOW): +0.11% on light volume. Workflow AI agent rollout is the medium-term driver; Q3 print due October 29. monday.com Ltd. (MNDY): -4.24% on light volume. mondayAI suite expansion is the multi-quarter narrative; down 39% year to date, the stock needs an enterprise deal flow signal to break the downtrend.

Vol / retail

Palantir Technologies Inc. (PLTR): -1.58% on 38M shares. AIP platform government and commercial expansion is the thesis; up 26.7% over the last five sessions, some consolidation is expected. Tesla Inc. (TSLA): -0.63% on average volume. Autonomous driving and the robotaxi timeline are the AI catalysts; down 27% year to date, sentiment remains divided. Snowflake Inc. (SNOW): +0.37% on average volume. AI-powered data cloud and Cortex AI features are the forward narrative; up 18.9% over the last month, worth watching for follow-through. For more daily recaps and the full AI stocks archive, see the AI Stocks Daily archive.