Datadog has reportedly offered nearly $4 billion to acquire Upwind Security, an Israeli cloud security startup whose software monitors AI agents running in the cloud. The catch: Upwind has not accepted the bid, and an Israeli business outlet says the offer was never made at all.

The reported Datadog bid for Upwind Security, barely above Upwind's private valuation

Graphic: GPTOnline, using Datadog assets

What Was Reported?

The Information reported on Thursday, October 22, that Datadog recently approached Upwind about an acquisition at a price close to $4 billion, citing people with knowledge of the matter (TradingView; Stocktwits). According to the report, Upwind did not take the bid. Instead, the startup is finalizing a $300 million funding round that values the company at roughly $3.8 billion.

A representative for Upwind declined to comment, and Datadog did not immediately respond to The Information’s requests for comment, the report said.

Conflicting Accounts

Calcalist’s technology desk, CTech, published a direct pushback on the story, reporting that it had learned “the reported offer was not made.”

That leaves the deal in reporting limbo: one credible outlet says the approach happened and was rejected; another says no offer existed in the first place. Neither company has issued an on-the-record confirmation either way. Until one of them does, the Datadog Upwind bid remains a contested claim rather than an established fact, and it should be read as such.

The Numbers

If The Information’s account is right, the arithmetic explains why Upwind would walk away. A $4 billion bid against a $3.8 billion private valuation leaves almost no takeover premium, the extra amount that normally convinces founders to sell rather than keep running the company. With the $300 million round already setting the market price for Upwind’s equity, Datadog’s offer barely clears that bar.

The round itself marks a steep climb: Upwind raised $250 million at a $1.5 billion valuation in January 2026, and the new round more than doubles that figure in under a year.

Investors in the would-be buyer were unconvinced. Datadog shares fell 5.1% on the news of the reported approach, a sign the market saw little logic in paying up for a target it could arguably have pursued earlier and cheaper.

Upwind Security, a cloud security startup focused on monitoring AI agents

Graphic: GPTOnline, using Upwind assets

Why Datadog Wants Upwind

Upwind was founded in 2022 by Amiram Shachar. Its platform watches applications and infrastructure running in the cloud, including emerging AI agents, and automatically detects and responds to potential breaches and attacks. Its customers include Roku and the Brazilian digital bank Nubank.

That capability sits squarely on the problem enterprise buyers are now trying to solve: putting observability and incident response around agent traffic, alongside human and service workloads. Datadog, the dominant cloud monitoring vendor, has been pushing further into security, and Upwind would hand it a purpose-built product for the AI-agent era.

The broader backdrop is a wave of consolidation talk across enterprise security. The Information also reported in August that Palo Alto Networks’ CEO had explored acquiring Datadog itself, which means the hunter in this story has also been hunted. Datadog is set to report third-quarter results on November 4, when analysts will likely press management on both rumors.

What Comes Next

Two realities are still possible. If an offer was indeed made and rejected, Upwind’s imminent $300 million round at $3.8 billion will set the new floor, and any future bid from Datadog or a rival will have to clear it by a much wider margin. If CTech’s account is right and no offer existed, the episode still reveals how highly the market values cloud security for AI agents, and Upwind will return to the spotlight once its funding round closes.

Either way, the fight over the facts makes this a story to watch rather than a done deal. GPTOnline will update this article as either company puts a statement on the record.

Sources