Upbeat Earnings Report Boosts Software Companies

Shares of Snowflake Inc. (SNOW), MongoDB Inc. (MDB), and Elastic NV (ESTC) experienced a significant surge in premarket trading on Tuesday. This comes after Datadog Inc.'s (DDOG) impressive earnings report helped alleviate concerns about consumption-based software companies for the latest quarter.

Snowflake shares saw a rise of over 8%, while MongoDB shares were up around 6%, and Elastic shares were ahead by approximately 4%. Meanwhile, Datadog's stock soared more than 24% following their encouraging results and outlook. Mizuho desk-based analyst Jordan Klein referred to them as "clearly one of the most shorted and oversold names" in the software industry, including consumption-based players.

Klein also mentioned that the positive performance of Datadog may signal a potential bounce for other peers such as SNOW, MDB, and ESTC. Additionally, he sees it as a promising sign for the demand trends of AWS and Azure, as well as the broader software market.

Overall, this positive earnings report from Datadog has brought renewed optimism to the software sector and heightened expectations for the upcoming reports from companies like SNOW, MDB, and ESTC.