According to an exclusive report published by The Information in October 2026, Datadog, a developer of data software for organisations, has approached Upwind with an acquisition proposal valued at close to USD 4 billion. Upwind has not accepted the offer. Representatives for Upwind declined to comment, while Datadog did not immediately respond to the publication’s requests for comment.
The approach is part of an effort by Datadog to expand its presence in security, at a time when companies are spending more on tools that protect against AI-related threats.
Upwind develops software that monitors applications running in the cloud, including AI agents. The platform automatically detects and responds to potential security breaches and hacking attempts. Monitoring AI agents is a growing area of security, and this coverage is relevant to the bid. In addition, companies are deploying these agents in cloud environments, and they need ways to track them and limit what they can do.
For Datadog, an acquisition of Upwind would add specialised security capabilities to its existing data software business.
A bid close to Upwind’s private valuation
Sources cited by The Information said Upwind is finalising a USD 300 million funding round at the same time. The round values the company at approximately USD 3.8 billion. The reported bid therefore exceeds the startup’s private valuation by only about USD 200 million, a small premium for a takeover of this size.
Industry insiders cited in the report attribute the narrow spread to Upwind’s market position and to investor appetite in the current private market. With the funding round nearing completion, Upwind can compare Datadog’s proposal with its standalone valuation as set by private investors.
AI-related threats reshape security spending
The discussions come as the cybersecurity sector faces intense pressure from AI-related threats. According to the report, advanced AI models have uncovered major vulnerabilities in widely used software infrastructure. The leaders of Anthropic and OpenAI have both publicly called for AI development to slow down, as their calls come amid an increase in cases of AI agents making decisions on their own.
These developments have accelerated corporate spending on specialised cybersecurity solutions. Enterprise demand for software that can track and secure cloud-based agents has risen sharply. As a result, security startups such as Upwind have become targets for consolidation across the industry.
If an agreement is reached, the deal would add Datadog to the security vendors competing for enterprise budgets tied to AI agent oversight. Neither company has confirmed the status of the talks.
