--- title: "Datadog finds cloud flaws quadrupled this year, and the whole jump came in June" description: "Datadog's State of Cloud Security 2026, built on thousands of customers' cloud estates, shows the median cloud service went from four serious vulnerabilities to about 16, a level shift that landed in June and has barely moved since. That plateau is the demand-side backdrop to the 17 percent selloff in Datadog shares over one AI customer's cutback." publisher: "The Inference" section: "Security" published: 2026-11-12T15:17:28.409Z modified: 2026-11-12T15:17:28.409Z canonical: https://theinference.org/article/datadog-finds-cloud-flaws-quadrupled-this-year-and-the-whole-jump-came-in-june language: en keywords: "Security, Datadog, Cloud Security, Observability, Vulnerabilities" --- # Datadog finds cloud flaws quadrupled this year, and the whole jump came in June > Datadog's State of Cloud Security 2026, built on thousands of customers' cloud estates, shows the median cloud service went from four serious vulnerabilities to about 16, a level shift that landed in June and has barely moved since. That plateau is the demand-side backdrop to the 17 percent selloff in Datadog shares over one AI customer's cutback. The industry's "vulnpocalypse" is real, and [Datadog](https://theinference.org/markets/companies/datadog)'s own telemetry says it arrived as a step, not a slope. The median cloud service in its [State of Cloud Security 2026](https://www.datadoghq.com/state-of-cloud-security/), published November 10, carried four times as many open high or critical vulnerabilities in November as in February [1], and [the month-by-month counts Infosecurity Magazine extracted](https://www.infosecurity-magazine.com/news/cloud-vulnerabilities-surge/) show the entire jump landing in June [2]. Since then the count has barely moved. That distinction bears directly on the fight over what Datadog is worth after last week's selloff. *Chart: **Serious flaws per cloud workload quadrupled, and the whole jump came in June** Line chart of the median open high or critical vulnerabilities per cloud service across February, May, June and November 2026, flat at four before a jump to 14 in June and 16 in November* *Median open high or critical vulnerabilities per cloud service, from Datadog Code Security's software composition analysis of thousands of customer applications. Sources: Datadog State of Cloud Security 2026; Infosecurity Magazine. [1][2]* ## AI models found the flaws, and adoption speed delivered them The report's mechanism runs from model to workload. Since May 2026, security-capable models such as [Anthropic](https://theinference.org/markets/companies/anthropic)'s Claude Mythos, GLM-5.2 and Kimi K3 have multiplied the volume of vulnerabilities being reported, and Datadog's analysis of thousands of customer applications shows those flaws reaching real cloud workloads rather than sitting in the CVE database [1]. The same pace shows in the supply chain: 60 percent of organizations run package versions released within the previous day [1]. ## Stolen keys do the damage, not stolen models The blast radius now includes AI itself. More than one in five organizations use cloud-hosted AI inference services [1], and nearly half of the organizations using Google's Gemini hold long-lived API keys that stay valid until revoked [1]. "Attackers don't need to use their own AI model if they can steal the key used to access yours," said Andrew Krug, Datadog's head of security advocacy [3]. Chief Information Security Officer Emilio Escobar closed the chain the whole report argues: in the AI era, security becomes an observability problem [3]. ## The AI cohort that drives growth also sets the price That is Datadog's pitch, and the quarter behind the selloff shows both its power and its concentration. [Revenue grew 35 percent in the third quarter](https://www.msn.com/en-us/news/other/datadog-q3-2026-earnings-call-transcript/ar-AA2gKVDI) [4]. Growth excluding AI customers accelerated for a fifth straight quarter [4]. The AI cohort passed 850 customers, and 39 of them now spend more than $1 million a year [4]. But the largest customer cut its usage while staying above its contractual minimum, and fourth-quarter guidance books that account only at the minimum [4]. [Several large AI customers renewed early, trading better prices for bigger commitments](https://theinference.org/article/datadog-bills-1-30-per-ai-credit-against-23-per-host-and-november-4-earnings-decide-which-wins), which management called a short-term revenue headwind [4]. [The stock fell 17 percent in the week through November 9](https://finance.yahoo.com/markets/stocks/articles/missing-forest-trees-datadog-sinks-233133577.html) [5]. *Chart: **Revenue has risen every quarter since late 2024, to $1.2B in Q3 2026, up 35 percent on a year earlier** Column chart of Datadog quarterly revenue from Q4 2024 to Q3 2026, rising from $0.74 billion to $1.20 billion* *Datadog revenue by quarter, in billions of dollars, from its SEC filings. Third-quarter 2026 revenue of $1.197 billion was up 35 percent from a year earlier. Source: Datadog quarterly figures from its SEC filings, retrieved 12 November 2026. [7]* ## February's first 2027 guidance is the test A flaw count that steps once and then flattens describes a permanently higher plateau of risk, not security demand that compounds every quarter; the compounding has to come from volume. The renegotiated contracts are commitments to spend more over time at lower unit prices, and whether that volume arrives is what February's first 2027 guidance will show [5]. In the gap between the risk and the workflow, the work is already being done: [Deployment Gates, now generally available](https://www.datadoghq.com/blog/deployment-gates/), watches production health and pauses a faulty release automatically [6], and dependency cooldowns are the report's own prescription [1]. The toll on AI-era software is real and permanent. What February prices is who keeps the margin on collecting it. ## Takeaway Datadog's own telemetry says the vulnerability surge was one June step to a new plateau rather than compounding risk, which leaves February's first 2027 guidance to prove the AI cohort's volume. ## Sources 1. [Datadog, State of Cloud Security 2026, 10 November 2026](https://www.datadoghq.com/state-of-cloud-security/) 2. [Infosecurity Magazine, Cloud Vulnerabilities Surge Fourfold in Less Than a Year, 11 November 2026](https://www.infosecurity-magazine.com/news/cloud-vulnerabilities-surge/) 3. [Datadog press release via MarketScreener, Serious Vulnerabilities in Cloud Workloads Increase 4x in Just Nine Months, Finds Datadog, 10 November 2026](https://www.marketscreener.com/news/datadog-serious-vulnerabilities-in-cloud-workloads-increase-4x-in-just-nine-months-finds-datadog-ce785edad18bf524) 4. [Benzinga via MSN, Datadog Q3 2026 earnings call transcript, 4 November 2026](https://www.msn.com/en-us/news/other/datadog-q3-2026-earnings-call-transcript/ar-AA2gKVDI) 5. [Yahoo Finance (TIKR), 'Missing Forest-for-the-Trees': Datadog Sinks 17% in a Week as Its Biggest AI Customer Cuts Back, 10 November 2026](https://finance.yahoo.com/markets/stocks/articles/missing-forest-trees-datadog-sinks-233133577.html) 6. [Datadog blog, Catch incidents and pause faulty deployments automatically with Datadog Deployment Gates, November 2026](https://www.datadoghq.com/blog/deployment-gates/) 7. [Datadog, quarterly figures from its SEC filings, retrieved 12 November 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001561550) --- Datadog finds cloud flaws quadrupled this year, and the whole jump came in June — The Inference. Canonical: https://theinference.org/article/datadog-finds-cloud-flaws-quadrupled-this-year-and-the-whole-jump-came-in-june