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Larry Benedict warns of a major Fed shift arriving May 15 (From Brownstone Research)

Harley Pivots Hard: Can New Bikes Fix an Old Brand?

Written by Jeffrey Neal Johnson on May 9, 2026 

Key Points

• Harley-Davidson has successfully reduced dealer inventories while seeing a strong increase in North American retail sales.
• A new strategic plan focuses on attracting younger riders by offering more accessible, affordable motorcycle models.
• Management has laid out a clear plan to improve dealer economics and drive long-term enterprise profitability.
• Special Report: The #1 stock to buy BEFORE the June S-1 filing (From Behind the Markets)

Harley-Davidson, Inc. (NYSE: HOG)delivered a mixed but telling first-quarter 2026 report, beating revenue expectations while navigating severe margin compression. The iconic motorcycle manufacturer posted revenues of $1.17 billion, comfortably ahead of the $1.01 billion consensus, signaling resilient consumer demand.

This top-line strength was overshadowed by a steep decline in profitability, with earnings per share (EPS) of 22 cents marking a significant drop from the $1.07 recorded in the prior-year quarter. Consolidated operating income fell 85% to just $23 million.

The results provide the first clear financial picture of Harley-Davidson’s aggressive new Back to the Bricks strategic plan. The strategy confronts the brand’s primary existential threat: an aging customer base. In response, management is pivoting toward more accessible, youth-oriented models while undertaking a costly but necessary reset of dealer inventories and operational economics. For investors, the quarter crystallizes the central conflict: Is Harley-Davidson executing a genuine, sustainable turnaround, or is the revenue beat a temporary sugar high fueled by promotions, with a long, uncertain road to recovering profitability?

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Tearing Down to Build Up: Harley’s Dealer Reset

A critical success in the first quarter was the deliberate and aggressive correction of dealer inventory. Global dealer inventory levels were drawn down 22% year-over-year, a move that directly refutes any narrative of channel stuffing. While wholesale shipments decreased by 3%, global retail sales expanded by 8% year over year, driven by a 14% increase in the critical North American market.

This inventory reset, though painful for near-term margins, is a foundational element of the new strategy. It leaves the dealer network in a much healthier position heading into the peak riding season, with approximately two-thirds of North American stock now composed of current 2026 model-year motorcycles.

This operational discipline improves dealer economics and reduces the need for the kind of broad, deep discounting that has historically eroded brand equity and profitability. The move aligns with Back to the Bricks’ focus on creating a win-win model in which dealer success directly translates into enterprise value.

A Demographic Cliff: Designing for a New Generation

The centerpiece of Harley-Davidson’s strategy is a direct confrontation with the demographic cliff that has challenged the brand for over a decade. The new strategy pivots away from an over-reliance on high-margin heavyweight touring bikes toward a more balanced, accessible product portfolio designed to attract younger riders.

Two key product initiatives anchor this pivot. The first is the return of the iconic Sportster model in 2027, a middleweight, highly customizable motorcycle that historically served as a critical entry point for new riders. The second is the launch of the all-new 440cc Sprint in the second half of 2026, a lightweight model aimed at an even more accessible price point. These moves are supported by a broader push into blank canvas models across the lineup, encouraging personalization through the high-margin Parts & Accessories division.

Management has attached concrete financial targets to this operational overhaul, aiming for over $350 million in Harley-Davidson Motor Company (HDMC) earnings before interest, taxes, depreciation, and amortization (EBITDA) by 2027. This goal is underpinned by a plan to achieve at least $150 million in annual run-rate cost savings against 2025 levels.

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Tariffs and Financing Headwinds Test the Turnaround

The path to restored profitability is complicated by significant external pressures. The first quarter results were heavily impacted by a $45 million hit from new and increased tariffs. For the full year, Harley-Davidson anticipates total tariff costs of $75 million to $90 million. However, recent regulatory developments offer a potential tailwind. A favorable court judgment in the EU resulted in a tariff refund, and new U.S. exemptions on certain imported manufacturing parts are expected to provide sequential margin relief as the year progresses.

Harley-Davidson’s financial architecture is also undergoing a fundamental change. Revenue from Harley-Davidson Financial Services (HDFS) declined 54% in the quarter. This was an expected outcome of a major strategic transaction with KKR and PIMCO in 2025, which transitioned HDFS to a capital-light, forward-flow model. While this de-risks Harley-Davidson’s balance sheet, it removes a significant source of historical profit and introduces new earnings volatility in a high-interest-rate environment.

Meanwhile, the LiveWire electric motorcycle division remains a work in progress, posting an $18 million operating loss for the quarter. In a crucial move to protect the core business, management confirmed during the earnings call that it has no current plans for Harley-Davidson to provide additional direct funding to the unit, effectively ring-fencing the legacy operation from the EV segment’s cash burn.

Reading the Room: Cautious Optimism on the Harley Rebuild

The market responded positively to the Q1 report, sending Harley-Davidson shares up over 8% on the day of the announcement. This price action suggests investors are prioritizing tangible evidence of strong retail demand and clarity about the new strategic direction over the stark reality of near-term margin compression.

Still, professional skepticism remains. The analyst consensus rating is Hold, with an average price target of $22.78, implying a downside, especially following the stock’s post-earnings rally. Short interest provides another layer of context. While still elevated, around 15% of the float, this figure represents a 16.4% decrease from the prior reporting period, indicating that the strong top-line performance and strategic pivot are forcing some bearish investors to cover their positions.

For now, the strategic roadmap appears credible, and the operational execution on inventory management is impressive. Investors might consider the recent rally a signal of renewed confidence in Harley-Davidson’s direction. Cautious observers, however, may prefer to await tangible retail results from the new Sprint and Sportster launches and clear evidence of sustained margin recovery before committing long-term capital.

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Weekly Newsletter

May 10, 2026

Happy Mother’s Day!

As we celebrate Mother’s Day, I want to take a moment to honor the incredible mothers, grandmothers, stepmothers and mother figures who strengthen our families, our communities and our nation every single day.

A mother’s love is one of God’s greatest gifts.  Mothers teach us right from wrong, encourage us through life’s challenges and sacrifice endlessly so their children can pursue brighter futures.  Their strength, patience and compassion help shape the values that make America strong.

I am especially grateful for the mothers across Arizona’s Ninth Congressional District who work tirelessly—often without recognition—to raise families, support their communities and pass down the principles of faith, hard work and personal responsibility to the next generation.

On this Mother’s Day, let us take time to thank the mothers in our lives for all they do and remind them how deeply they are loved and appreciated.

From my family to yours, I wish you a joyful and blessed Mother’s Day!

Democrats Grounded Spirit Airlines

Over the past week, I have received a significant amount of mail from constituents asking about the collapse of Spirit Airlines and the devastating impact it has had on workers, travelers and the airline industry. Given the concern, I wanted to take a moment to address what happened—and more importantly, who is responsible.

The facts are straightforward.  Spirit Airlines’ proposed merger with JetBluewas widely viewed as the company’s best opportunity to remain financially viable in an increasingly difficult economic climate. Rather than allow a private-sector solution to move forward, however, the Biden administration’s Department of Justice aggressively intervened to block the merger.  Congressional Democrats and liberal activists cheered the decision every step of the way. (Be sure to check out the Tweet of Week below.)

At the time, Democrats led by liberal Massachusetts Senator Elizabeth Warren proudly claimed that the Biden administration was “right to stand up for consumers and fight against runaway airline consolidation.  This is a Biden win for flyers.”

Nothing could be further from the truth.  The reality is that the Biden administration destroyed Spirit’s ability to survive.

The result was entirely predictable.  Spirit Airlines collapsed, thousands of workers were put at risk, and American consumers lost one of the nation’s largest low-cost carriers.  Families now face fewer affordable travel options because Democrats chose ideology over economic reality.

Even more outrageous, many of the same Democrats who celebrated blocking the merger are now scrambling to point fingers elsewhere and rewrite history. That may help protect their political talking points, but it does nothing for the employees who lost jobs or the Americans now paying higher prices to travel.

This was not an unavoidable market failure. It was government interference, plain and simple.

In contrast, President Trump understood the importance of preserving American jobs and affordable travel options and did everything within reason to keep the airline afloat short of forcing taxpayers to fund another massive bailout. Unfortunately, by the time the damage from the Biden administration’s economic policies and regulatory overreach had fully set in, the problems facing Spirit had become far too severe.

When politicians in Washington insert themselves into private business decisions to score political points, working Americans are the ones who suffer the consequences. Spirit Airlines is merely the latest example of what happens when radical regulators believe they know better than the marketplace.

I will continue fighting against heavy-handed government intervention and support policies that allow businesses to compete, innovate and succeed without unnecessary obstruction from bureaucrats and political activists.

Thank you again to everyone who took the time to write to me about this important issue.

Gosar Bill Boosts Yuma Proving Ground

This week, I introduced legislation to strengthen the mission of the U.S. Army Yuma Proving Ground by authorizing the withdrawal of approximately 22,000 acres of federal land needed to safely conduct advanced military testing and training operations.

Yuma Proving Ground is one of the most important military installations in the country and plays a critical role in preparing our armed forces for modern battlefield threats. My bill ensures our troops have the space, safety buffers and operational flexibility necessary to continue mission-critical testing and training for decades to come.

Importantly, the legislation protects existing public land management, recreation, hunting access, wildlife conservation efforts and regional utility infrastructure while advancing America’s military readiness and national security interests.

Supporting our troops and strengthening our national defense should never be a partisan issue, and I am proud to lead this effort on behalf of Arizona and our nation.

Click here to learn more about this important legislation.

No Free Tuition for Illegal Aliens

This week, I proudly cosponsored H.R. 2490, the No In-State Tuition for Illegal Immigrants Act, legislation ensuring taxpayer-funded colleges and universities stop giving illegal aliens benefits that are denied to American citizens from other states.

I have led this fight for years.  Faithful Gosar Newsletter readers will recall that back in the 116th Congress, I introduced H.R. 1190 to close loopholes that allowed illegal aliens to receive discounted in-state tuition while many American students were forced to pay significantly higher out-of-state rates.

American taxpayers should not be subsidizing special benefits for those who entered our country illegally—especially while hardworking American citizens are being priced out of higher education opportunities. Recent actions by the Department of Justice against states like Nebraska and New Jerseyconfirm what we have said all along: these policies violate both the spirit and intent of federal law.

Arizona once prohibited in-state tuition for illegal aliens. In 2006, voters approved a proposition barring those benefits.  However, in 2019, the Arizona Board of Regents adopted a policy granting reduced tuition rates to illegal aliens, and in 2022, voters passed Proposition 308, which guarantees in-state tuition for illegal aliens in Arizona.

If this legislation is passed by Congress and signed into law, federally funded schools such as ASU and the University of Arizona could be prohibited from using taxpayer dollars to subsidize tuition benefits for illegal aliens. Ultimately, taxpayer money should be used to benefit American citizens.

American students must come first. Period.

Standing Up for Victims with Kayleigh’s Law

I recently proudly cosponsored Congressman Abe Hamadeh’s Kayleigh’s Law, legislation that would require federal courts to issue permanent no-contact orders against convicted violent felons and sex offenders when requested by victims or prosecutors.

Having passed at the state level in both Arizona and Wisconsin, this legislation, named after Kayleigh Kozak, a young woman from Arizona who was victimized as a child, prohibits all forms of direct or indirect contact with the victim for the rest of the guilty predator’s life.

No victim should be forced to repeatedly return to court and relive traumatic experiences simply to maintain basic protections from dangerous criminals. Kayleigh’s Law ensures these safeguards remain in place for life—even after an offender completes prison time, probation or supervised release.

This commonsense legislation puts victims first, strengthens accountability for violent predators and closes dangerous gaps in federal law. Survivors deserve lasting peace of mind, not endless legal battles with the people who harmed them.

Reminder: Gosar Hosts Passport Fair in Goodyear – You’re invited!

Join us for a convenient, one-stop opportunity to apply for your U.S. passport right here in Goodyear. This Passport Acceptance Fair is designed to make the process simple and accessible for individuals and families.

Whether you’re applying for the first time or assisting a minor, this event will have the resources and guidance you need. Be sure to bring the required documents, including your completed application, proof of citizenship, valid ID, and passport photo.

Don’t miss this opportunity to take the next step in your travel plans—we look forward to seeing you there!  More information in the flyer above.

Tweet of the Week (This didn’t age well):

Photo of the Week:

📸 Leslie Johnson from Young, AZ sent in this photo of an unusual but incredible cloud formation.  Amazing picture, Leslie.  Thanks so much for sharing.

Do you want the chance for your photograph to be featured as our “Picture of the Week?”   If so, send your best shots along with a brief description to Anthony.foti@mail.house.gov.  Remember to include your name and where you live.  

Gosar in the News and Other Must-Read Stories:

📰 Times News: Arizona Representatives seeks to protect sex abuse victims

🗞 American Greatness: Fauci’s Lab Leak Henchmen Are Finally Facing Accountability

📰 Fox News: The inconvenient truth behind the left’s horrible Spirit Airlines debacle

🗞 Newsmax: 186K Dead People Collecting SNAP Benefits

📰 ABC 15: More than 30 missing and endangered kids located by U.S. Marshals in Phoenix operation

⚠ Warning!!  The Gosar Weekly Newsletter is meant for discerning readers with above-average intelligence.  We link to interesting stories.  We get stories a couple different ways: Google alerts, a third-party aggregator and sometimes readers send stuff.  We don’t vouch for every publication or every author.  If we link to a story, it is because of that story. The views expressed in any of the publications do not represent any promotion, endorsement or reflection of Congressman Gosar’s views.  While we try our best, we cannot guarantee every news organization spouting hatred, animosity or divisiveness will be filtered from appearing in the Gosar Weekly Newsletter.  We will endeavor to prevent that from happening by never linking to Fake News organizations including CNN, MSNBC, CNBC, Rolling Stone, the Arizona Republic, the Arizona Mirror, Media Matters or the New Republic. WEBSITE |  UNSUBSCRIBE |  CONTACT MEShare on Facebook | Share on TwitterWashington, DC Office
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Motherhood, risk and the WNBA: What I learned reporting through pregnancy USA TODAY Sports · Callie Fin How a frightening complication led a mom-to-be to the realization that opinions about her career did not matter as much as her life or her baby’s life. 

Iran responds to U.S. ceasefire proposal as drones target Gulf nations Associated Press · Jon Gambrell and Samy Magdy Iran seeks to end the war on all fronts while saying it’s on “full readiness” to protect its nuclear sites. 

Poll: Americans disagree on what a ‘stolen’ election means POLITICO · Jessie Blaeser and Erin Doherty New results show Democrats are worried about voter suppression while Republicans are worried about voter fraud. 

He’s a U.S. citizen and combat veteran Reason.com · Autumn Billings ICE tear-gassed, jailed, and falsely accused him, a story that has played out thousands of times during the second Trump administration. 

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This is what happened when Trump abandoned the world’s poorest children The New York Times · Nicholas Kristof Why the president’s most lethal policy will almost surely be his 71 percent cut in humanitarian aid from 2024 to 2025. 

The new Wild West of AI kids’ toys Ars Technica · Sophie Charara, Wired.com These connected companions could disrupt everything from make-believe to bedtime stories. No wonder some lawmakers want them banned. 

TikTok creator’s Spirit Airlines campaign racks up more than $335M in pledges FOX Business · Michael Sinkewicz Hunter Peterson’s video proposing the purchase has garnered more than 7 million views in about a week. 

A complete taxonomy of MLB’s ABS accidents theringer.com · Ben Lindbergh The challenge system’s robot rulings may be nearly flawless, but in the human element, error abounds. 

A century ago, an explorer and his pilot claimed to fly over the North Pole Smithsonian Magazine · Alice George Here’s why experts doubt that historic achievement. 

Music’s 10 weirdest alter egos Rolling Stone · Rob Sheffield There’s a long tradition of artists going incognito — from huge rock stars to hip-hop wildcards. 

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Today’s Night Prayer is brought to you by LifeQuotes

A Night Prayer

Jesus Christ, my God, I adore You and thank You for all the graces You have given me this day. I offer You my sleep and all the moments of this night. I place myself and all my loved ones, wherever they may be, in Your sacred side and under the mantle of Our Blessed Mother. Let Your holy angels stand watch and keep us in peace. Amen.

Quote of the Day

“He heals the brokenhearted, and binds up their wounds.” -Psalm 147:3 

Today’s Meditation

“The search for God present outside demands a certain effort of the imagination, which results in a greater struggle and subsequent fatigue. The return of God present within us presupposes a simple glance of faith. The divine indwelling in a soul in a state of grace is a reality that requires no composition of place, nor that, in order to reach it, I should set off on a sort of audacious and fantastic pilgrimage to the confines of space. I have only to enter into my interior, and God is there.” —Raoul Plus S.J., p.101

An excerpt from How To Pray Always

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Examination of Conscience

The daily examination of conscience is an ancient Catholic practice. It’s very simple, and it’s designed to help us identify our sins and weaknesses so that we can improve and grow stronger in the spiritual life, while providing an excellent ongoing preparation for regular Confession. It consists of taking a few minutes at the end of the day to prayerfully review our actions in the light of God’s commandments, followed by the Act of Contrition.

 Reflect on the victories and losses

Actively reflecting on the high and low points of the day can help you live more intentionally and bring a renewed sense of resolve into the following day.

• Review your actions, words, and thoughts today. Did you actively guard yourself against temptation? Where did sin creep in?
• In what moments did you practice virtue and moral courage?
• Were you attuned to the Holy Spirit’s promptings today? Where did you feel His inspiration?
• Ask Him for the graces necessary to follow His Will more purposefully tomorrow.

 Act of Contrition

O my God, I am heartily sorry for having offended Thee, and I detest all my sins because of Thy just punishments, but most of all because they offend Thee, my God, Who art all good and deserving of all my love. I firmly resolve with the help of Thy grace to sin no more and to avoid the near occasions of sin. Amen.

 Practice gratitude

It is God’s love that has brought you into existence and to this exact moment. Practice looking for His hand in your day. 

• Where did you feel His loving gaze upon you today?
• What people or moments helped you see God in your life?
• Thank God for all these moments!
• Ask Him to help you recognize His blessings and providence tomorrow.

 Renew your commitment to Christ

Remember: our Faith is founded upon a Person—Christ! Renew your personal love and devotion to Him.

• Thank God for the gift of His Son Jesus and our call to be His disciples.
• Tell the Lord of your desire to know Christ more personally.
• If possible, set an intention for your day tomorrow. Ask Our Lord to guide you in this act.
• Pray a Hail Mary, Our Father, or another beloved prayer.

Rest with God

In peace I will both lie down and sleep; for Thou alone, O Lord, makest me dwell in safety. — Psalm 4:8

Compline

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UnsubscribeThe #1 stock to buy BEFORE the June S-1 filing (From Behind the Markets)

Is Backblaze the Next Momentum Monster?

Written by Jeffrey Neal Johnson

A staggering 64% single-day stock appreciation on more than 30 times the average trading volume is rarely a quiet event. For storage cloud platform Backblaze, Inc. (NASDAQ: BLZE), the explosive move following its first-quarter earnings report signals more than just a momentary triumph; it points to a fundamental re-rating by the market.

Institutional capital appears to be aggressively targeting Backblaze’s deep structural cost advantage and its pivotal role in the artificial intelligence (AI)infrastructure landscape. The company is fueled by a triad of catalysts: exponential data growth from multimodal AI, a revamped go-to-market (GTM) engine, and a clear line of sight to free cash flow positivity. Driven by these catalysts, Backblaze is methodically stripping market share from incumbent hyperscalers. For investors, understanding this dynamic is key to navigating Backblaze’s next phase.

Backblaze’s Strategic Neocloud Advantage

The primary driver behind this re-evaluation is Backblaze’s positioning as a critical infrastructure partner for the emerging Neocloud market. As severe supply chain constraints on GPUs and high-performance memory hamstring legacy hyperscalers, AI developers are increasingly turning to a decentralized ecosystem of specialized cloud providers for compute resources. This macro-headwind for giants like Amazon.com, Inc. (NASDAQ: AMZN) and Microsoft Corporation (NASDAQ: MSFT) has become a powerful tailwind for Backblaze.

AI workloads, particularly in the training phase of large language and diffusion models, generate massive, bursty data transfers. Developers require an open, low-cost data lake that can store petabytes of data and rapidly deploy it to any Neocloud platform with GPU capacity. Backblaze has become this mission-critical data layer.

Backblaze’s traction in this segment is accelerating. In Q1, the AI customer count surged 76% year-over-year (YOY), driven by two new generative AI contracts totaling $1.5 million in annual contract value. Management now estimates its total addressable market within the Neocloud data lake tier alone will reach $14 billion by 2030, a substantial runway for growth. Backblaze is actively building for this demand, replacing 100-gigabit network links with 400-gigabit connections to handle the elephant flows characteristic of AI model training.

From Consumer Backup to Enterprise Beast

Historically perceived as a consumer-focused backup service, Backblaze has undergone a significant GTM transformation to attack the enterprise and AI opportunity. A key move was the recent appointment of Anuj Kumar as Chief Revenue Officer. Kumar brings a wealth of experience scaling enterprise cloud infrastructure sales from his time at industry heavyweights such as NetApp, Inc. (NASDAQ: NTAP), VMware, and Red Hat.

This new leadership is institutionalizing a more disciplined and aggressive sales motion. Initiatives like the Flamethrower startup program and a new partnership with Andreessen Horowitz’s founder resource program are systematically embedding Backblaze within the venture-backed tech ecosystem. This proactive approach is designed to capture high-growth companies early in their lifecycle, a strategy already bearing fruit with a 72% YOY growth in customers generating over $50,000 in annual recurring revenue (ARR). The total company ARR now stands at $158.2 million, up 13% YOY, with the core B2 Cloud Storage segment’s ARR growing at a robust 28% clip.

How Backblaze’s Economics Are Disrupting the Cloud Giants

Backblaze’s foundational appeal is its disruptive unit economics. Following a pricing and packaging overhaul effective May 1, 2026, Backblaze’s B2 Cloud Storage is priced at a fraction of what its larger competitors charge. While hyperscalers can charge upwards of $20 per terabyte per month and levy significant data egress fees, Backblaze offers a simplified, more predictable model. This structure eliminates API transaction fees and provides generous free egress, a critical factor for AI companies that must constantly move large datasets between storage and compute environments without incurring punitive costs.

This competitive advantage is now translating into expanding operating leverage. Q1 results showcased this inflection.

• Revenue: $38.7 million, beating consensus estimates and representing 12% YOY growth.
• B2 Cloud Storage Revenue: Grew 24% YOY, becoming the clear engine of the business.
• Adjusted EBITDA: Reached $10.1 million, for a 26% margin, a healthy expansion from the 18% margin reported in Q1 2025.
• B2 Net Revenue Retention (NRR): A solid 110%, demonstrating strong expansion within its existing customer base.

Crucially, management provided clear guidance for a pivotal financial milestone. Despite pulling forward capital expenditures from 2027 into 2026 to meet surging demand, Backblaze projects it will achieve positive adjusted free cash flow in the second half of the year. This transition to self-funded growth significantly de-risks the investment narrative and signals a new phase of financial maturity.

Trading the Afterburn: Charting the Next Move for Backblaze

The 64% surge in Backblaze, Inc.’s stock price was not an anomaly but a market acknowledgment of a rapidly strengthening fundamental story. With powerful AI tailwinds, a maturing enterprise sales organization, and a clear trajectory toward sustained profitability, Backblaze appears well-positioned to continue its assault on the cloud storage market.

However, a single-day move of this magnitude introduces significant near-term volatility. Prudent investors might consider the technical landscape. Rather than chasing the initial explosive candle, a more disciplined approach may be to watch for the stock to consolidate its gains, potentially forming a multi-day or multi-week flag pattern. Such a consolidation would allow the market to digest the new information and could provide a more structured entry point for those looking to capitalize on Backblaze’s long-term growth thesis. READ THIS STORY ONLINE

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The AI Fear Around Datadog Stock May Have Been Completely Wrong

Written by Thomas Hughes

Datadog (NASDAQ: DDOG) is a great example of why investing based on emotion, contrary to fundamentals, is such a bad idea. Fear of a Software-as-a-Service (SaaS) AI disruptionhelped to drive Datadog stock to long-term lows, despite its bullish fundamentals. Now, Datadog is not only still outperforming, but the SaaS fears seem to have been completely misplaced. AI isn’t disrupting business for this and other software-specific companies; it’s accelerating it, and the runway for growth remains robust. Agentic AI is now the name of the game, and it is in its earliest phases of adoption.

Datadog Is Barking Up the Right Tree in Q1

Datadog’s Q1 2026 earnings resultsprove that it has been barking up the right tree. The company’s revenue growth accelerated to over 32%, outpacing the consensus estimate by more than 500 basis points (bps), producing the first-ever billion-dollar quarter. 

Growth was driven by new clients, with large contributors increasing by 21% and compounded by service penetration. New products are also a driver, including AI and datacenter-specific tools aimed at easing deployments, management, and security outcomes.

Margin was another area of strength. The revenue surge and operational quality produced significant margin improvement, with net income more than doubling on a GAAP basis, and adjusted operating income growing by 34%. 

More importantly, adjusted income outpaced the consensus by more than 1,750 bps, and earnings strength is expected to continue in the upcoming quarters.

DDOG stock shot up by 30% in premarket trading following earnings, largely due to management’s forward guidance. Business momentum led management to increase guidance for Q2 and the year, indicating strengths will persist. 

Agentic AI is expected to accelerate over the coming quarters, as data center capacity improves, models are trained, and inference gains traction. In this scenario, Datadog’s growth may accelerate over the coming years, setting the stage for a sustained bullish revision cycle across revenue, earnings, and price targets. As it stands, DDOG trades at less than 15X its 10-year earnings forecast, suggesting a 50% upside is possible, relative to its critical resistance, the all-time high set in 2021.

Analysts Respond With Cautious Optimism

Analysts were cautious with their response but are optimistic about Datadog’s future. They cited the strong revenue growth and guidance, along with the latest FedRAMP certification, which promises to drive growth in both public and private business. The FedRAMP High authorization is among the highest designations for government cloud providers, enabling the security of sensitive but not classified documents. The move affirms Datadog’s utility, opening the door to a wider range of government business, while providing visible reassurance to commercial business and investors.

As it stands, the consensus price target suggests DDOG is fairly valued near the high-end of its trading range, but recent analyst revisions are more bullish. They put DDOG above the $200 market and at a fresh all-time high. 

This is significant as a move to fresh all-time highs would break DDOG stock out of a trading range and brings aggressive targets into play. In this scenario, DDOG could experience a dynamic shift in which price headwinds become tailwinds, amplifying upside potential. The base case would be a move equal to the trading range, setting the long-term target at approximately $220, potentially reached within 12 to 18 months of the fresh high.

Institutions are a risk. The group owns a substantial 80% of the shares and has been distributing on a trailing 12-month basis. They run a high $2.5-to-$1 balance and will likely sell into the rally, given the rapid 30% stock price increase and the potential to take profits. Early price action reflects resistance at the critical level and an uncertain market, so how much institutions sell is critical. Assuming the guidance update is sufficient to invigorate a more bullish posture, DDOG should move to fresh highs quickly; if not, investors should prepare for a price correction, potentially closing the gap that formed upon the release, before any fresh high is reached.

Datadog Balance Sheet Is a Reason to Own This Stock

Datadog’s balance sheet reflects the business quality and strength, with cash and assets rising, outpacing the increase in liabilities, and equity following suit. The critical takeaways include $4.8 billion in cash and marketable assets, low total leverage, with equity nearly doubling total liabilities, and a net cash position. The company is in a fortress-like position, capable of executing strategy and on track to initiate capital returns within the next few years. The biggest risk for DDOG stock is persistently high near-term valuations, but the company continues to prove its worth. READ THIS STORY ONLINE

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3 REITs to Watch as AI Data Center Spending Surpasses Office Construction

Written by Jessica Mitacek

The proliferation of artificial intelligence (AI) has resulted in abundant market opportunities.

From NVIDIA (NASDAQ: NVDA) to Micron Technology (NASDAQ: MU), AI stocks have shown their ability to not just outperform the market, but to do so by leaps and bounds.

While pure-play AI stocks’ performances and record Magnificent Seven CapEx allocations have provided a glimpse into this megatrend, one remarkable feat demonstrates just how impactful AI growth has become.

The AI-driven acceleration of data center construction has resulted in spending that now surpasses the total spending on office building construction. This presents a unique opportunity tailored for income investors who are looking for yield and AI growth exposure—something that each of the following three real estate investment trusts(REITs) provides.

Data Center Spending Surges as Office Construction Lags

Alongside AI and cloud computing demand, data center construction reached a record annualized rate of $45 billion in December 2025. For the first time ever, that figure exceeded private office construction, which fell to $44 billion.

While that landmark accomplishment was years in the making, demand for data centers is unlikely to abate. Industry consultancy firm Grand View Research forecasts the global data center market—estimated at $383.82 billion in 2025—to reach $902.19 billion by 2033, implying a compound annual growth rate (CAGR) of 11.3% from 2026 to 2033.

The North America data center segment alone, which accounts for more than 38% of the global total addressable market, is projected to grow at a CAGR of 10.5% during the forecast period. By comparison, the office building construction market is expected to undergo a CAGR of 8.5% through 2033, suggesting that this disparity is just getting started.

A Mountain of Potential From a Legacy Data Manager

Founded in 1951, Iron Mountain (NYSE: IRM) converted to a REIT in 2014.

As it expanded from legacy records management company to colocation data center operator, the 75-year-old company has amassed 240,000 customers spanning 61 countries, including 95% of Fortune 1000 members.

The REIT continues to help organizations unlock value through services, including information management, digital transformation, information security, and data center/asset lifecycle management needs.

While REITs are known for generating yield, Iron Mountain is the quintessential example of how a data center REIT can simultaneously offer strong dividends and growth. Over the past month, shares have gained nearly 28%, contributing to a year-to-date (YTD) gain of more than 60%.

Meanwhile, the trust’s dividend currently yields 2.67%, or $3.46 per share annually, with an annualized five-year growth rate of 5.45%.

Big Tech’s Big Data Center Partner

Digital Realty Trust (NYSE: DLR) is a REIT that owns, acquires, and operates carrier-neutral data centers and provides colocation and interconnection services.

Its focus is on large-scale, mission-critical facilities that support the physical infrastructure needs of cloud providers, enterprises, network operators, and content companies.

That has resulted in partnerships with exceptionally large tech companies, including NVIDIA, Oracle (NYSE: ORCL), Dell Technologies (NYSE: DELL), and Advanced Micro Devices (NASDAQ: AMD), as Digital Realty has become synonymous with wholesale data center space, turnkey facilities, and retail colocation suites.

The REIT hosts NVIDIA’s AI Factory Research Center in Northern Virginia and has partnered with Advanced Micro Devices on the Digital Realty Data Center Innovation Lab—a so-called AI sandbox, “hands-on facility where partners, enterprises, and customers can test and prove AI deployments in a real colocation environment,” according to the company.

Shares of DLR have seen a YTD gain of more than 29%, and its dividend currently yields 2.5%, or $4.88 per share annually.

The World’s Largest Data Center REIT

With a market cap of nearly $108 billion, Equinix (NASDAQ: EQIX) is the world’s largest data center REIT.

After converting to a trust on Jan. 1, 2015, it provides digital infrastructure and interconnection services, while specializing in carrier-neutral data centers and colocation.

Like Digital Realty, Equinix operates a platform that enables enterprises, cloud and network service providers, and content companies to colocate IT infrastructure, interconnect directly with partners and providers, and access cloud on-ramps and network services in a secure, low-latency environment.

Today, the REIT boasts more than 280 data center locations on six continents. Its data center operations serve customers that range from large multinational enterprises to cloud providers and telecommunications operators. Equinix emphasizes interconnection density and ecosystem partnerships as differentiators in enabling digital transformation and low-latency connectivity.

Shares of EQIX are up more than 43% this year, and the REIT’s dividend currently yields 1.92%, or $20.64 per share annually. That yield may be lower than the other two REITs on this list, but Equinix has increased its distribution for 10 years consecutively, while its annualized five-year growth rate of 12.01% surpasses both Iron Mountain and Digital Realty. READ THIS STORY ONLINE

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