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Datadog and Palo Alto Are Going Shopping—And They’re Not Bargain Hunting
When $1 billion is your warm-up act, you know tech M&A is back in heat.
In two separate but equally spicy headlines, two cybersecurity powerhouses are reportedly preparing to go on major spending sprees:
- Datadog (NASDAQ: DDOG) is in talks to acquire Israeli startup Upwind for ~$1 billion, per Calcalist.
- Palo Alto Networks (NASDAQ: PANW) is reportedly sniffing around SentinelOne (NYSE: S) for an eye-watering $10 billion.
Let’s break them down—because both moves say a lot about where cloud security and AI-native observability are headed.
Datadog’s Upwind Move: From Observability to Full-On Visibility
Datadog wants Upwind. And probably pretty badly. And for good reason.
Upwind, a red-hot Israeli cybersecurity startup, raised $100 million just seven months ago in a Series A that pegged it around a $900 million valuation. Now, Datadog’s trying to snatch it for ~$1 billion, which in tech M&A terms is basically “next-day shipping.”
Why it makes sense:
- Upwind specializes in cloud runtime security—exactly the kind of capability Datadog needs to protect workloads beyond just monitoring them.
- This gives DDOG a leg up against observability rivals like Chronosphere, which is eating into its OpenAI business (UBS flagged that recently).
- Datadog is trying to become a full-stack observability + security platform, and Upwind is the secret sauce for runtime threat visibility.
The real play here is AI + security. Monitoring used to be about “is this breaking?” Now it’s:
“Is this being exploited?”
And Datadog wants to answer that natively—without needing third-party bolt-ons.
Palo Alto + SentinelOne: A $10B Swing for a Heavyweight Belt
Now let’s talk about the potentially game-changing move: Palo Alto (PANW) going after SentinelOne (S).
At up to $10 billion, this would be Palo Alto’s largest deal ever—a 10x jump from its usual “tuck-in and chill” acquisitions.
So why now?
- SentinelOne is an endpoint + XDR darling, with strong ML-based threat detection and SIEM ambitions
- This acquisition would supercharge PANW’s XSIAM platform, giving it a real shot at SIEM market share dominance
- Even analysts like Scotiabank’s Patrick Colville admit this would be a “major strategic pivot”—but a logical one
The downside? It’s pricey. $10B likely means a ~2pp hit to FCF margins, and integration would be way messier than past Palo Alto buys. But hey—you don’t grow a cyber empire without breaking a few platforms.
If this deal goes through, Palo Alto instantly becomes the apex predator in detection and response—and a direct challenger to CrowdStrike, Splunk, and even Microsoft Defender.
The Bigger Signal: Cybersecurity Is in Superconsolidation Mode
Both deals scream the same thing:
The cloud is messy, AI is unpredictable, and no one wants to be the vendor without runtime coverage.
- Datadog is beefing up to move beyond logs and metrics into live protection
- Palo Alto is trying to own the full response cycle, not just network edge firewalls
Meanwhile, if you’re a high-growth startup with Israeli DNA and “cloud” or “AI” in your pitch deck? You’ve got a price tag now—and it likely starts at 9 digits.
Investor Takeaways
DDOG (Datadog):
- Buying growth, not pivoting—Upwind fits right into their stack
- Keeps it asset-light and accretive
- A subtle but important move toward being an AI-native security play
PANW (Palo Alto Networks):
- Going big or going home—this would be a generational bet
- If it lands, PANW could become a SIEM/XDR powerhouse
- But expect integration risk and margin dilution in the short term
S (SentinelOne):
- Rallying on the rumors (+9.8% Monday)—and rightfully so
- This might be their “exit or die” moment in a competitive space
Final Thought:
These aren’t just random shopping sprees. They’re power plays in the cybersecurity arms race—where everyone’s fighting for data, detection, and differentiation.
If you’re not building a full-stack security platform by 2026, you’re getting absorbed into one.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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