The first week of August delivered results from five of the eight biggest sellers of cloud infrastructure billed by usage rather than by seat, and their disclosures converged on one point: demand from artificial-intelligence workloads is real, large, and arriving at a lower gross margin than the business it is being added to.

Datadog, which sells observability software — infrastructure monitoring, application tracing and log management priced per monitored host and per gigabyte ingested — grew revenue 35.6% to $1.121bn and raised its full-year guidance. Its gross margin nonetheless slipped to 78.6% from 80.4% two quarters earlier. Cloudflare, which runs a global edge network handling security, content delivery and a serverless developer platform, grew 35.9% to $696.1m and posted its first sequential gross-margin gain in eight quarters, to 71.8% — still 320 basis points below a year ago. ServiceNow, the largest company here at $131.8bn and the seller of workflow software for corporate information-technology, human-resources and customer-service departments, grew revenue 24% but grew gross profit only 13.1%; its gross margin fell 680 basis points to 70.7% and operating income dropped 54.7%.

That is the same demand driving the revenue acceleration eating into the profit line the market is capitalising.

Who was punished and who was rewarded

The market's response bore almost no relation to who reported. Datadog fell 20.4% on 6 August on roughly triple its normal volume — its largest single-day drop on record — because third-quarter guidance implies deceleration to 28–29% growth after its largest artificial-intelligence customer signed a nine-figure renewal and then cut its usage. Datadog now counts more than 750 AI customers, 31 of them spending over $1m a year and eight over $10m; net revenue retention is in the low 120s.

Akamai, at $17.1bn the smallest name and the operator of a content-delivery and edge-security network now pivoting into cloud compute, jumped 12% after hours on a $600m four-year robotics-cloud commitment, opened at $124 the next morning and closed at $110.54. Cloudflare opened at $318 after a 16.5% after-hours pop and closed at $300.27. ServiceNow fell 6.5% on its 22 July print, then rose 33.5% over the next thirteen sessions on no company disclosure at all, having guided third-quarter current remaining performance obligations to slow to 19.5% growth from 21%.

The two biggest gainers of the past month reported nothing. Snowflake, the $116bn cloud data-warehouse company, last spoke on 27 May; it rose 28% and touched a 52-week high of $321.84 on a $6bn Amazon Web Services agreement and price-target raises. MongoDB, which sells its document database chiefly through the managed Atlas service, last spoke on 28 May and rose 21.8%, including a six-day, 20% streak worth about $4.8bn that began with Palantir's 4 August results lifting the entire enterprise-software complex. Behind it sits a rotation out of chips: the PHLX Semiconductor Index fell from 14,655 in June to 11,194 in July as money moved into software.

The business verdict: CONFIRMS for five, CONTRADICTS for two

Snowflake's revenue growth has accelerated for three quarters — 28.7%, 30.1%, 33.5% — with operating margin improving to -23.5% from -29.7%. Cloudflare's net retention rose to 120%, remaining obligations reached $2.73bn (+38%), and it added two million developers to its Workers platform in one quarter. Toast, which sells point-of-sale and payments systems to restaurants, added a record 9,500 net locations to reach 180,000 and nearly doubled net income to $154m as operating margin went from 5.2% to 8.0%. MongoDB grew 25.2% with losses narrowing.

It contradicts at two. Okta, the identity-management company whose shares rose 88.9% in ninety days, has grown 12.7%, 11.6%, 11.6% and 11.2% in its last four quarters, and consensus expects 10.0% next year and 9.5% after — even after new products reached about a quarter of bookings. Akamai grew revenue 5.4% but its gross profit fell 0.5% and operating income fell 47%; its delivery segment shrank 6% to $396m, and consensus has full-year earnings per share falling 5% to $6.69, the only declining forward earnings in the group.

The valuation verdict: CONTRADICTS, across all eight

Measured against early May, when these multiples were last catalogued, every member is dearer. On price-to-gross-profit — the right cross-sectional lens when margins range from Toast's 27% to Datadog's 79% — Snowflake went from 15.7x to 34.3x, Okta 6.0x to 10.8x, Datadog 17.0x to 29.4x, MongoDB 11.7x to 17.9x, Cloudflare 45.4x to 60.4x, ServiceNow 8.7x to 12.0x, Akamai 5.7x to 7.0x and Toast 10.5x to 11.4x. Snowflake's market value has gone from roughly $56bn to $116bn without a single earnings report in between. Cloudflare trades at 259x forward earnings on a 0.34% free-cash-flow yield; Akamai, at 17.6x forward earnings and a 3.68% yield, is the outlier in the other direction, and is the one whose gross profit is falling.

The trend has been supportive throughout: Snowflake and Datadog both crossed into sustained uptrends in late spring, Cloudflare's 50-day average has sat above its 200-day since 5 May, and ServiceNow only completed the same crossover on 7 August. Akamai stepped down from that condition on 2 July — the one tape signal that matched its numbers.

The setup

Where it stands — Revenue is accelerating at five of eight, gross margins are compressing at three, and every valuation is above its May level.

Would confirm — Snowflake product revenue growth holding above 30% and Datadog's fourth-quarter guide above 28% despite the customer usage cut.

Would invalidate — Datadog gross margin below 78% next quarter, or Cloudflare net retention slipping back under 118%.

Watch next — Snowflake and MongoDB report fiscal second-quarter results in late August 2026; Akamai's $1.8bn cloud ramp starts in the fourth quarter.

Valuation — Price-to-gross-profit spans 7.0x (Akamai) to 60.4x (Cloudflare) trailing; forward sales multiples sit barely below trailing, from 2.8x to 39.2x.