Between 22 July and 6 August, seven of these eight companies reported. The prints were, on the top line, better than the software industry's 2026 reputation would suggest. Cloudflare, which runs a global network selling denial-of-service protection, zero-trust access and edge computing to enterprises and developers, grew revenue 36% to $696.1m and raised full-year guidance to a range topping out at $2.870bn. That was its fourth consecutive quarter of acceleration. Dollar-based net revenue retention — what existing customers spend now versus a year ago — reached 120%, up six points on the year. Management says more than half the traffic crossing its network is now AI agents rather than people.

Datadog, which monitors cloud infrastructure and bills per host and per log ingested, also accelerated for a fourth straight quarter, to 35.6% and $1.121bn, its fastest sequential growth since 2022. ServiceNow, whose workflow software runs corporate IT and HR processes on a per-seat licence, reaccelerated to 24.0%, with current remaining performance obligations — contracted revenue due within a year — up 21.5% and artificial-intelligence contract value crossing $1bn.

The cost of serving AI

The same quarters show where the growth is being bought. Cloudflare's reported gross margin fell to 71.8% from 74.9%. Datadog's fell to 78.6% from 79.9%, and slipped sequentially too. ServiceNow's dropped to 70.7% from 77.5%, a 681-basis-point compression that took operating margin to 4.1% from 11.1%. Akamai, the original content-delivery network now rebuilding itself around security and cloud compute, is worse: revenue grew 5.4%, gross margin fell to 55.8%, and gross profit shrank 0.5% outright. Its shares fell after the print as profit contracted under build-out costs, with all existing graphics-processor capacity sold out. Third-quarter capital spending is guided at up to 46% of revenue, funded partly by a $3.5bn zero-coupon convertible and a suspended buyback.

Toast is the exception, and it is the exception in the direction that matters. Gross margin reached 27.0% against 25.3%, operating margin 8.0% against 5.2%, on revenue up 23.1% to $1.908bn. It added a record 9,500 net restaurant locations to roughly 180,000 and raised full-year guidance for recurring gross profit growth. Even its problem is instructive: hardware margin sits near -11% because AI demand has inflated memory-chip prices, and management expects a bigger hit in 2027 than 2026.

What the month actually priced

The group's 12.4% gain over the 18 sessions to 17 August does not survive inspection. Remove each company's two best days and the equal-weight return is -1.6%, with six of eight negative. ServiceNow's 14.5% month becomes -7.1%; Toast's 14.0% becomes -0.2%; Cloudflare's 10.6% becomes -1.7%; Datadog is down 3.4% before stripping and down 17.7% after.

The biggest day was not an earnings day. ServiceNow rose 15.9% on 28 July, six sessions after its own results, alongside Toast up 10.7%. That was the day money rotated out of chip stocks and into beaten-down software, with Salesforce and Workday moving in step; the Philadelphia Semiconductor Index had run more than 130% into a June high before investors decided the AI trade needed rebalancing. Datadog's best session, up 11.5% on 10 August, came four days after its print, on a wave of broker price-target increases.

The two moves that do survive the strip belong to the two companies that have published nothing. MongoDB, which sells the Atlas managed document database, is up 41.7% over the month, 23.8% ex its two best days — and has not held an earnings call since 28 May. Snowflake, whose data platform bills per credit of compute consumed, is up 24.0% and last reported on 27 May; its advance came with a sequence of price-target raises rather than new consumption data.

Dearer at every one

Measured against trailing gross profit, all eight are more expensive than in early May, by an average of 51%. Snowflake went from 15.7x to 33.9x. Datadog went from 17.0x to 27.9x, MongoDB from 11.7x to 18.8x, Cloudflare from 45.4x to 59.8x. Cloudflare is the dearest thing here on any measure: 53.5x forward gross profit and 257x forward earnings, against a quarterly net loss of $170.0m and a full-year restructuring charge lifted to $165m.

Okta, which sells single sign-on and identity management per seat, is the awkward case. Its multiple went from 6.0x to 10.3x trailing gross profit, a 72% expansion, while the business decelerated for a fourth straight quarter to 11.2% growth and consensus models 9.5% for the fiscal year ending January 2028. It has reported nothing since 28 May and fell 4.1% over the month. Its margins, at least, are going the right way: operating margin 7.3% against 5.7%.

The premium over application software has widened rather than closed. HubSpot, which sells marketing and sales software to mid-sized firms, trades near 4.4x gross profit; Monday.com, a work-tracking tool, near 3.2x. Both are down more than half over twelve months. Toast, at 11.0x against 10.5x in May, is the only member of the infrastructure group whose multiple has barely moved while its gross profit grew 32%.

The setup

Where it stands — Revenue is accelerating at four of these eight, gross margin is compressing at every AI-exposed one, and all are dearer than in May. Would confirm — Cloudflare or Datadog posting a sequential gross-margin gain on a reported basis next quarter. Would invalidate — Datadog's third quarter landing at the guided 28-29% growth or below as its largest AI customer cuts usage. Watch next — Snowflake and MongoDB report late August, their first income statements since May. Valuation — Group ranges from Akamai at 7.3x trailing gross profit to Cloudflare at 59.8x trailing and 53.5x forward.