DigitalOcean (DOCN)
Market Price (5/30/2026): $157.06 | Market Cap: $14.6 BilSector: Information Technology | Industry: Internet Services & Infrastructure
DigitalOcean (DOCN)
Market Price (5/30/2026): $157.06Market Cap: $14.6 BilSector: Information TechnologyIndustry: Internet Services & Infrastructure
Investment Highlights Why It Matters Detailed financial logic regarding cash flow yields vs trend-riding momentum.
Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 31% Megatrend and thematic driversMegatrends include Cloud Computing. Themes include Infrastructure as a Service (IaaS), and Platform as a Service (PaaS). | Trading close to highsDist 52W High is -4.9%, Dist 3Y High is -4.9% Meaningful short interestShort Interest % of Basic SharesShort Interest % of Basic Shares = (Short Interest Quantity) / (Basic Shares Outstanding). A high fraction of short interest can indicate potential risk of a short squeeze. is 14% | Expensive valuation multiplesP/EBITPrice/EBIT or Price/(Operating Income) ratio is 67x, P/CFOPrice/(Cash Flow from Operations). CFO is cash before capital expenditures. is 50x Stock price has recently run up significantly6M Rtn6 month market price return is 250%, 12M Rtn12 month market price return is 459% Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 213% Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -2.7% Key risksDOCN key risks include [1] intense competition from hyperscale cloud providers threatening its market share and [2] scrutiny over its specific financial health, Show more. |
| Attractive cash flow generationCFO/Rev LTMCash Flow from Operations / Revenue (Sales), Last Twelve Months (LTM) is 31% |
| Megatrend and thematic driversMegatrends include Cloud Computing. Themes include Infrastructure as a Service (IaaS), and Platform as a Service (PaaS). |
| Trading close to highsDist 52W High is -4.9%, Dist 3Y High is -4.9% |
| Meaningful short interestShort Interest % of Basic SharesShort Interest % of Basic Shares = (Short Interest Quantity) / (Basic Shares Outstanding). A high fraction of short interest can indicate potential risk of a short squeeze. is 14% |
| Expensive valuation multiplesP/EBITPrice/EBIT or Price/(Operating Income) ratio is 67x, P/CFOPrice/(Cash Flow from Operations). CFO is cash before capital expenditures. is 50x |
| Stock price has recently run up significantly6M Rtn6 month market price return is 250%, 12M Rtn12 month market price return is 459% |
| Valuation getting more expensiveP/S 6M Chg %Price/Sales change over 6 months. Declining P/S indicates valuation has become less expensive. is 213% |
| Yield minus risk free rate is negativeERPEquity Risk Premium (ERP) = Total Yield - Risk Free Rate, Reflects the premium above risk free assets offered by the investment. is -2.7% |
| Key risksDOCN key risks include [1] intense competition from hyperscale cloud providers threatening its market share and [2] scrutiny over its specific financial health, Show more. |
Qualitative Assessment
AI Analysis | Feedback
DigitalOcean (DOCN) stock has gained about 180% since 1/31/2026 because of the following key factors:
1. Strong Q1 2026 Earnings Beat and Upgraded Financial Outlook. DigitalOcean exceeded expectations in its first quarter 2026 earnings report on May 5, 2026, with revenue of $258 million (22% year-over-year increase) surpassing estimates of $249.8 million. Non-GAAP diluted net income per share of $0.44 significantly beat analyst consensus estimates, which ranged from $0.23 to $0.27 per share. Following these strong results, management raised its full-year 2026 revenue guidance to $1.130 billion-$1.145 billion, implying 25-27% year-over-year growth, and projected 2027 revenue growth to exceed 50%, reaching over $1.7 billion. This performance and optimistic guidance led to a stock surge, including a 40.40% increase on May 5, 2026.
2. Accelerating Growth in AI-Native Cloud and High-Value Customers. The company's strategic pivot to an "AI-Native Cloud," launched on April 28, 2026, resonated strongly with investors, indicating significant future growth potential. In Q1 2026, Annual Run-Rate Revenue (ARR) from AI customers surged 221% year-over-year to $170 million. Furthermore, DigitalOcean demonstrated robust expansion among its larger clientele, with ARR from customers spending over $1 million annually growing 179% year-over-year to $183 million. The company also achieved a record $62 million in incremental organic ARR.
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Stock Movement Drivers
Fundamental Drivers
The 182.3% change in DOCN stock from 1/31/2026 to 5/29/2026 was primarily driven by a 206.3% change in the company's P/E Multiple.| (LTM values as of) | 1312026 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 55.25 | 155.95 | 182.3% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 864 | 949 | 9.8% |
| Net Income Margin (%) | 29.2% | 25.0% | -14.4% |
| P/E Multiple | 20.0 | 61.3 | 206.3% |
| Shares Outstanding (Mil) | 91 | 93 | -2.0% |
| Cumulative Contribution | 182.3% |
Market Drivers
1/31/2026 to 5/29/2026| Return | Correlation | |
|---|---|---|
| DOCN | 182.3% | |
| Market (SPY) | 9.6% | 27.4% |
| Sector (XLK) | 32.9% | 40.0% |
Fundamental Drivers
The 283.5% change in DOCN stock from 10/31/2025 to 5/29/2026 was primarily driven by a 109.1% change in the company's P/E Multiple.| (LTM values as of) | 10312025 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 40.66 | 155.95 | 283.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 833 | 949 | 13.9% |
| Net Income Margin (%) | 15.2% | 25.0% | 64.4% |
| P/E Multiple | 29.3 | 61.3 | 109.1% |
| Shares Outstanding (Mil) | 91 | 93 | -2.1% |
| Cumulative Contribution | 283.5% |
Market Drivers
10/31/2025 to 5/29/2026| Return | Correlation | |
|---|---|---|
| DOCN | 283.5% | |
| Market (SPY) | 11.5% | 34.4% |
| Sector (XLK) | 27.4% | 44.8% |
Fundamental Drivers
The 404.7% change in DOCN stock from 4/30/2025 to 5/29/2026 was primarily driven by a 130.7% change in the company's Net Income Margin (%).| (LTM values as of) | 4302025 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 30.90 | 155.95 | 404.7% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 781 | 949 | 21.5% |
| Net Income Margin (%) | 10.8% | 25.0% | 130.7% |
| P/E Multiple | 33.8 | 61.3 | 81.5% |
| Shares Outstanding (Mil) | 92 | 93 | -0.8% |
| Cumulative Contribution | 404.7% |
Market Drivers
4/30/2025 to 5/29/2026| Return | Correlation | |
|---|---|---|
| DOCN | 404.7% | |
| Market (SPY) | 38.0% | 36.9% |
| Sector (XLK) | 83.0% | 42.9% |
Fundamental Drivers
The 394.5% change in DOCN stock from 4/30/2023 to 5/29/2026 was primarily driven by a 188.7% change in the company's P/S Multiple.| (LTM values as of) | 4302023 | 5292026 | Change |
|---|---|---|---|
| Stock Price ($) | 31.54 | 155.95 | 394.5% |
| Change Contribution By: | |||
| Total Revenues ($ Mil) | 576 | 949 | 64.6% |
| P/S Multiple | 5.3 | 15.3 | 188.7% |
| Shares Outstanding (Mil) | 97 | 93 | 4.1% |
| Cumulative Contribution | 394.5% |
Market Drivers
4/30/2023 to 5/29/2026| Return | Correlation | |
|---|---|---|
| DOCN | 394.5% | |
| Market (SPY) | 89.0% | 46.6% |
| Sector (XLK) | 158.6% | 47.6% |
Price Returns Compared
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Total [1] | |
|---|---|---|---|---|---|---|---|
| Returns | |||||||
| DOCN Return | 89% | -68% | 44% | -7% | 41% | 216% | 257% |
| Peers Return | 34% | -30% | 54% | 27% | 19% | 20% | 162% |
| S&P 500 Return | 27% | -19% | 24% | 23% | 16% | 10% | 101% |
Monthly Win Rates [3] | |||||||
| DOCN Win Rate | 60% | 25% | 67% | 42% | 67% | 100% | |
| Peers Win Rate | 68% | 28% | 70% | 60% | 50% | 60% | |
| S&P 500 Win Rate | 75% | 42% | 67% | 75% | 67% | 60% | |
Max Drawdowns [4] | |||||||
| DOCN Max Drawdown | - | -71% | -60% | -33% | -45% | -24% | |
| Peers Max Drawdown | -14% | -40% | -19% | -21% | -32% | -25% | |
| S&P 500 Max Drawdown | -5% | -25% | -10% | -8% | -19% | -9% | |
[1] Cumulative total returns since the beginning of 2021
[2] Peers: AMZN, MSFT, GOOGL, AKAM, ORCL.
[3] Win Rate = % of calendar months in which monthly returns were positive
[4] Max drawdown represents maximum peak-to-trough decline within a year
[5] 2026 data is for the year up to 5/29/2026 (YTD)
How Low Can It Go
| Event | DOCN | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -41.5% | -18.8% |
| % Gain to Breakeven | 70.9% | 23.1% |
| Time to Breakeven | 211 days | 79 days |
| 2024 Yen Carry Trade Unwind | ||
| % Loss | -13.0% | -7.8% |
| % Gain to Breakeven | 15.0% | 8.5% |
| Time to Breakeven | 4 days | 18 days |
| Summer-Fall 2023 Five Percent Yield Shock | ||
| % Loss | -59.3% | -9.5% |
| % Gain to Breakeven | 145.9% | 10.5% |
| Time to Breakeven | 737 days | 24 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -59.0% | -24.5% |
| % Gain to Breakeven | 144.0% | 32.4% |
| Time to Breakeven | 1406 days | 427 days |
In The Past
DigitalOcean's stock fell -41.5% during the 2025 US Tariff Shock. Such a loss loss requires a 70.9% gain to breakeven.
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| Event | DOCN | S&P 500 |
|---|---|---|
| 2025 US Tariff Shock | ||
| % Loss | -41.5% | -18.8% |
| % Gain to Breakeven | 70.9% | 23.1% |
| Time to Breakeven | 211 days | 79 days |
| Summer-Fall 2023 Five Percent Yield Shock | ||
| % Loss | -59.3% | -9.5% |
| % Gain to Breakeven | 145.9% | 10.5% |
| Time to Breakeven | 737 days | 24 days |
| 2022 Inflation Shock & Fed Tightening | ||
| % Loss | -59.0% | -24.5% |
| % Gain to Breakeven | 144.0% | 32.4% |
| Time to Breakeven | 1406 days | 427 days |
In The Past
DigitalOcean's stock fell -41.5% during the 2025 US Tariff Shock. Such a loss loss requires a 70.9% gain to breakeven.
Preserve Wealth
Limiting losses and compounding gains is essential to preserving wealth.
Asset Allocation
Actively managed asset allocation strategies protect wealth. Learn more.
About DigitalOcean (DOCN)
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The AWS or Google Cloud for individual developers and small businesses.
A simplified and more affordable AWS or Google Cloud, built for developers and small teams.
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- Compute Infrastructure: Provides on-demand virtual servers and computing resources for running applications and workloads.
- Storage Infrastructure: Offers various storage solutions for data persistence, including block storage and object storage.
- Networking Infrastructure: Enables secure and scalable connectivity, traffic management, and private networking for cloud resources.
- Managed Application Offerings: Delivers fully managed services for deploying, running, and scaling web and mobile applications.
- Managed Container Offerings: Provides managed services for deploying and orchestrating containerized applications.
- Managed Database Offerings: Offers fully managed database services for popular database engines, handling operational complexities.
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DigitalOcean (DOCN) primarily serves a broad base of developers, start-ups, and small to medium-sized businesses (SMBs) through its self-service cloud computing platform. Due to the fragmented nature of its customer base and its business model as a cloud infrastructure provider, DigitalOcean does not typically have a few large, identifiable "major customers" that are public companies. Instead, its customer base can be categorized as follows:
- Developers and IT Professionals: This category includes software engineers, researchers, data scientists, and system administrators who utilize DigitalOcean's platform for building, deploying, and managing web and mobile applications, websites, and other digital infrastructure.
- Start-ups and Small to Medium-Sized Businesses (SMBs): Businesses of various sizes, particularly those in their early stages or with smaller IT budgets, leverage DigitalOcean for their core operations, including website hosting, e-commerce platforms, media and gaming applications, and managed services.
- Individuals (Students and Hobbyists): The platform also caters to individual users, such as students learning about cloud computing or hobbyists working on personal web projects and experimental applications.
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- Equinix, Inc. (EQIX)
- Digital Realty Trust, Inc. (DLR)
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Paddy Srinivasan, Chief Executive Officer
Paddy Srinivasan was appointed Chief Executive Officer of DigitalOcean in February 2024. He brings over 25 years of experience in technology leadership to the role. Before joining DigitalOcean, Srinivasan served as CEO at GoTo (formerly LogMeIn), a SaaS company providing cloud communication and IT management software. His career includes leadership positions at major technology companies such as Microsoft, Amazon (where he was General Manager for Data, Machine Learning Platform Services, Alexa AI), and Oracle. He also co-founded Opstera, a cloud monitoring and managed service provider, which was subsequently acquired by Avanade (a Microsoft-Accenture company).
Matt Steinfort, Chief Financial Officer
Matt Steinfort became DigitalOcean's Chief Financial Officer in January 2023. Prior to this role, he was the Chief Financial Officer at Zayo, a global communications infrastructure platform. Steinfort also founded Envysion, a video intelligence SaaS company, where he held the positions of President and CEO. His professional background includes leadership roles at ICG Communications, Level 3 Communications, Bain & Company, and Cambridge Technology Partners.
Vinay Kumar, Chief Product and Technology Officer
Vinay Kumar serves as the Chief Product and Technology Officer at DigitalOcean.
Cynthia Carpenter, Senior Vice President, People
Cynthia Carpenter holds the position of Senior Vice President, People at DigitalOcean.
Larry D'Angelo, Chief Revenue Officer
Larry D'Angelo is the Chief Revenue Officer for DigitalOcean.
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Here are the key risks to DigitalOcean's business:- Intense Competition and Hyperscaler Expansion: DigitalOcean operates in a highly competitive cloud computing market, facing formidable rivals such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, as well as numerous smaller cloud providers. A significant risk is that these larger "hyperscale" cloud providers, with their vast resources and economies of scale, could more aggressively target the small and medium-sized business (SMB) segment, which is DigitalOcean's primary customer base. This heightened competition could lead to price wars, reduced market share, and pressure on DigitalOcean's pricing power and profitability.
- Customer Churn and Low Net Revenue Retention: DigitalOcean faces challenges with customer retention, as indicated by its net revenue retention rate. A low net revenue retention rate suggests that existing customers are not increasing their spending with the company over time, or that a notable portion of customers are leaving. This necessitates a continuous effort to acquire new customers to drive revenue growth, which can be more costly and less sustainable than growing revenue from existing clients.
- Debt Structure and Financial Fluctuations: The company is exposed to risks related to its financial structure, including approximately $1.5 billion in convertible notes, with a significant maturity in 2026. This debt represents a potential financial risk, as settling it through the issuance of new shares at current market prices could result in substantial shareholder dilution. Additionally, DigitalOcean faces challenges with fluctuations in financial results, making it difficult to project future outcomes and potentially leading to stock price volatility if expectations are not met.
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The clear emerging threat for DigitalOcean is the rise of highly specialized, developer-centric platforms that offer an even higher level of abstraction and opinionated workflows for specific application types (e.g., web applications, APIs, static sites). Companies like Vercel, Netlify, Render, and Railway are gaining significant traction by providing streamlined, often Git-driven deployment experiences that abstract away much of the infrastructure management, appealing directly to DigitalOcean's core customer base of developers, startups, and small to medium-sized businesses who prioritize simplicity and rapid deployment for specific workloads. These platforms represent a shift in how certain applications are built and deployed, potentially drawing developers away from more generalized cloud offerings.
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DigitalOcean's primary products and services address several significant and growing segments within the global cloud computing market. Here are the addressable market sizes for DigitalOcean's main offerings: * **Cloud Computing (Overall Platform)**: The global cloud computing market was valued at approximately USD 781.27 billion in 2025 and is projected to reach USD 2,904.52 billion by 2034, growing at a compound annual growth rate (CAGR) of 15.7%. North America is a dominant region, holding a 52.0% market share in 2025. Other estimates place the global market at USD 1.04 trillion in 2026, projected to reach USD 2.65 trillion by 2031 with a CAGR of 20.65%. * **Infrastructure as a Service (IaaS)**: The global IaaS market was valued at around USD 190.32 billion in 2025 and is projected to grow to USD 896.74 billion by 2034, with an 18.40% CAGR. North America accounted for 44.50% of this market in 2025. Another report estimates the global IaaS market to be between USD 120 billion and USD 140 billion in 2025, with a projected CAGR of 20% to 25% from 2025 to 2030. * **Platform as a Service (PaaS)**: The global PaaS market was valued at USD 167.93 billion in 2025 and is projected to reach USD 693.29 billion by 2034, exhibiting a CAGR of 17.06%. North America dominated the PaaS market with a 48.65% share in 2024. Another source estimates the global PaaS market at USD 101.93 billion in 2025, growing to USD 453.11 billion by 2033 at a CAGR of 20.5%. * **Cloud Storage**: The global cloud storage market was valued at USD 161.28 billion in 2025 and is projected to reach USD 809.99 billion by 2034, with a CAGR of 19.30%. North America held the largest share of this market, at 46.40% in 2025. The global cloud-based storage market is also reported to have reached USD 60.39 billion in 2025 and is projected to expand to USD 261.41 billion by 2033, reflecting a CAGR of 20.1%. * **Cloud Networking / Multi-Cloud Networking**: The multi-cloud networking market size was USD 4.0 billion globally in 2025 and is projected to grow to USD 15.0 billion by 2032, with a CAGR of 20.8%. North America leads this market with a 40% share. Another estimate for the global multi-cloud networking market size was USD 2.03 billion in 2024, projected to reach USD 13.14 billion by 2033, growing at a CAGR of 23.7%. * **Managed Kubernetes / Containers as a Service (CaaS)**: The global containers as a service (CaaS) market size was approximately USD 11.99 billion in 2025 and is predicted to increase to USD 48.84 billion by 2035, expanding at a CAGR of 15.08%. North America dominated this market with a 45% share in 2025. The global container orchestration market, a key component of CaaS, was estimated at USD 1.71 billion in 2024 and is projected to reach USD 8.53 billion by 2030, growing at a CAGR of 31.8%. North America held over 36.0% of the global market in 2024 for container orchestration. * **Managed Databases (DBaaS)**: The managed database service market is projected to grow from USD 19.39 billion in 2023 to USD 84.1 billion by 2032, with a CAGR of 17.71%. North America leads the managed database service market, accounting for approximately 45% of the global share. Another report indicates the global cloud database and DBaaS market was valued at USD 23.45 billion in 2025 and is projected to reach USD 103.04 billion by 2035, with a CAGR of 15.95%. North America accounted for the largest market share of 36% in 2025.AI Analysis | Feedback
DigitalOcean (DOCN) is expected to drive future revenue growth over the next 2-3 years through several key strategies:
-
Focus on Digital Native Enterprises (DNEs) and Scaling Larger Customers: DigitalOcean is increasingly concentrating its efforts on attracting and expanding relationships with larger Digital Native Enterprises and customers generating higher Annual Recurring Revenue (ARR). The company reported significant growth in its million-dollar customers, with a 123% year-over-year increase in ARR for this cohort in Q4 2025. This focus on scaling with larger, high-growth customers is a key driver as these accounts are accelerating faster than the broader market.
-
Expansion into AI/ML Workloads and Inference Cloud Services: DigitalOcean is strategically positioning itself as a platform for AI and cloud-native companies, particularly for production AI workloads. The company's AI customer ARR grew 150% year-over-year in Q4 2025, constituting 12% of total ARR. A substantial portion (70%) of this AI revenue comes from inference services or general cloud, rather than bare metal GPU rentals, indicating a shift towards higher-value offerings. DigitalOcean is investing in GPU capacity and an inference cloud capability to capture this growing market segment.
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Increased Data Center Capacity: To support its anticipated growth, DigitalOcean plans to bring 31 megawatts of new data center capacity online in 2026. This significant infrastructure expansion, with facilities ramping throughout the year, is projected to enable the company to achieve an exit revenue growth rate above 25% by Q4 2026 and reach 30% growth in 2027.
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Product Innovation and Adoption of Higher-Value Managed Services: Continuous product development and the introduction of new features, such as remote MCP support, agent development kit, GPU observability, managed NFS, and multi-node GPU capabilities, are expected to contribute to revenue growth. Furthermore, the increasing adoption of managed services like Kubernetes and Databases, which saw approximately 20% year-over-year growth in early 2025, enhances customer stickiness and drives up average revenue per user (ARPU).
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Share Repurchases
- DigitalOcean has repurchased 2.4 million shares for $82 million in 2025, at an average price of approximately $35 per share.
- Cumulative share repurchases since its IPO reached $1.6 billion and 34.9 million shares through December 31, 2025.
- The company has a remaining $100 million share buyback authorization that extends through July 31, 2027.
Share Issuance
- In 2025, DigitalOcean recorded $4.355 million in proceeds from the issuance of common stock under its equity incentive plan.
- The company received $4.653 million in proceeds from the issuance of common stock under its employee stock purchase plan in 2025.
- Weighted average fully diluted shares outstanding for full-year 2025 were approximately 106 million to 107 million shares.
Capital Expenditures
- DigitalOcean's total capital expenditures were $266 million in 2025, $186 million in 2024, and $125 million in 2023.
- Capital expenditures for property and equipment were $129.086 million in 2025 and $178.167 million in 2024.
- The primary focus of capital expenditures is on investments in data centers and GPU capacity to accelerate growth, including securing approximately 30 megawatts of incremental data center capacity to support growth in 2026 and beyond.
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| 04302026 | PLTR | Palantir Technologies | Monopoly | MY | Getting CheaperMonopoly-Like with P/S DeclineLarge cap with monopoly-like margins or cash flow generation and getting cheaper based on P/S multiple | 0.0% | 0.0% | 0.0% |
| 04102026 | ADSK | Autodesk | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 8.5% | 8.5% | 0.0% |
| 04102026 | BSY | Bentley Systems | Dip Buy | DB | FCFY OPMDip Buy with High FCF Yield and High MarginBuying dips for companies with high FCF yield and meaningfully high operating margin | 4.2% | 4.2% | 0.0% |
| 04102026 | ENPH | Enphase Energy | Dip Buy | DB | P/E OPMDip Buy with Low PE and High MarginBuying dips for companies with tame PE and meaningfully high operating margin | 5.7% | 5.7% | 0.0% |
| 04102026 | BL | BlackLine | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 3.2% | 3.2% | -3.0% |
| 04102026 | DOCN | DigitalOcean | Quality | Q | Momentum | UpsideQuality Stocks with Momentum and UpsideBuying quality stocks with strong momentum but still having room to run | 27.6% | 27.6% | -2.8% |
| 08312023 | DOCN | DigitalOcean | Dip Buy | DB | CFO/Rev | Low D/EDip Buy with High Cash Flow MarginsBuying dips for companies with significant cash flows from operations and reasonable debt / market cap | 40.2% | 38.4% | -26.7% |
Research & Analysis
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Peer Comparisons
| Peers to compare with: |
Financials
| Median | |
|---|---|
| Name | |
| Mkt Price | 248.21 |
| Mkt Cap | 1,778.2 |
| Rev LTM | 191,175 |
| Op Inc LTM | 53,050 |
| FCF LTM | 399 |
| FCF 3Y Avg | 11,050 |
| CFO LTM | 86,022 |
| CFO 3Y Avg | 70,680 |
Growth & Margins
| Median | |
|---|---|
| Name | |
| Rev Chg LTM | 16.2% |
| Rev Chg 3Y Avg | 13.2% |
| Rev Chg Q | 20.0% |
| QoQ Delta Rev Chg LTM | 4.5% |
| Op Inc Chg LTM | 18.3% |
| Op Inc Chg 3Y Avg | 22.5% |
| Op Mgn LTM | 24.4% |
| Op Mgn 3Y Avg | 23.5% |
| QoQ Delta Op Mgn LTM | 0.2% |
| CFO/Rev LTM | 36.9% |
| CFO/Rev 3Y Avg | 36.5% |
| FCF/Rev LTM | 9.3% |
| FCF/Rev 3Y Avg | 14.2% |
Valuation
| Median | |
|---|---|
| Name | |
| Mkt Cap | 1,778.2 |
| P/S | 10.3 |
| P/Op Inc | 33.7 |
| P/EBIT | 26.8 |
| P/E | 36.0 |
| P/CFO | 23.0 |
| Total Yield | 3.2% |
| Dividend Yield | 0.1% |
| FCF Yield 3Y Avg | 2.3% |
| D/E | 0.1 |
| Net D/E | 0.0 |
Returns
| Median | |
|---|---|
| Name | |
| 1M Rtn | 23.3% |
| 3M Rtn | 40.4% |
| 6M Rtn | 17.5% |
| 12M Rtn | 68.3% |
| 3Y Rtn | 122.5% |
| 1M Excs Rtn | 17.0% |
| 3M Excs Rtn | 30.2% |
| 6M Excs Rtn | 5.8% |
| 12M Excs Rtn | 38.7% |
| 3Y Excs Rtn | 53.5% |
Price Behavior
| Market Price | $155.95 | |
| Market Cap ($ Bil) | 14.3 | |
| First Trading Date | 03/24/2021 | |
| Distance from 52W High | -4.9% | |
| 50 Days | 200 Days | |
| DMA Price | $112.94 | $63.49 |
| DMA Trend | up | up |
| Distance from DMA | 38.1% | 145.6% |
| 3M | 1YR | |
| Volatility | 111.6% | 81.5% |
| Downside Capture | 71.96 | 230.56 |
| Upside Capture | 427.96 | 367.86 |
| Correlation (SPY) | 25.8% | 34.6% |
| 1M | 2M | 3M | 6M | 1Y | 3Y | |
|---|---|---|---|---|---|---|
| Beta | 1.13 | 1.16 | 1.49 | 2.04 | 2.19 | 2.00 |
| Up Beta | 0.89 | 0.54 | 0.78 | 0.80 | 1.61 | 1.69 |
| Down Beta | -24.49 | 2.23 | 0.67 | 1.42 | 1.71 | 1.86 |
| Up Capture | 213% | 320% | 370% | 720% | 855% | 3216% |
| Bmk +ve Days | 15 | 22 | 31 | 66 | 141 | 428 |
| Stock +ve Days | 13 | 26 | 35 | 68 | 130 | 381 |
| Down Capture | 288% | -60% | 96% | 152% | 167% | 113% |
| Bmk -ve Days | 4 | 18 | 30 | 56 | 108 | 321 |
| Stock -ve Days | 9 | 17 | 29 | 57 | 121 | 371 |
[1] Upside and downside betas calculated using positive and negative benchmark daily returns respectively
Based On 1-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with DOCN | |
|---|---|---|---|---|
| DOCN | 446.3% | 81.4% | 2.42 | - |
| Sector ETF (XLK) | 66.5% | 20.7% | 2.36 | 41.5% |
| Equity (SPY) | 30.3% | 11.8% | 1.94 | 34.4% |
| Gold (GLD) | 37.5% | 26.7% | 1.17 | 3.1% |
| Commodities (DBC) | 39.6% | 18.8% | 1.63 | -5.8% |
| Real Estate (VNQ) | 12.5% | 13.1% | 0.64 | 11.9% |
| Bitcoin (BTCUSD) | -31.8% | 41.6% | -0.81 | 20.5% |
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Based On 5-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with DOCN | |
|---|---|---|---|---|
| DOCN | 29.0% | 71.1% | 0.66 | - |
| Sector ETF (XLK) | 23.9% | 24.8% | 0.84 | 54.1% |
| Equity (SPY) | 14.3% | 17.0% | 0.66 | 51.9% |
| Gold (GLD) | 18.8% | 18.0% | 0.85 | 5.1% |
| Commodities (DBC) | 10.2% | 19.4% | 0.41 | 6.4% |
| Real Estate (VNQ) | 3.4% | 18.8% | 0.08 | 36.0% |
| Bitcoin (BTCUSD) | 14.6% | 54.6% | 0.46 | 27.0% |
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Based On 10-Year Data
| Annualized Return | Annualized Volatility | Sharpe Ratio | Correlation with DOCN | |
|---|---|---|---|---|
| DOCN | 13.7% | 70.7% | 0.65 | - |
| Sector ETF (XLK) | 26.0% | 24.5% | 0.95 | 53.6% |
| Equity (SPY) | 15.9% | 17.9% | 0.76 | 51.3% |
| Gold (GLD) | 13.3% | 16.0% | 0.69 | 5.3% |
| Commodities (DBC) | 7.3% | 17.9% | 0.33 | 6.4% |
| Real Estate (VNQ) | 5.7% | 20.7% | 0.24 | 35.5% |
| Bitcoin (BTCUSD) | 67.0% | 66.9% | 1.06 | 26.8% |
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Returns Analyses
Earnings Returns History
Updated 5/28/2026| Forward Returns | |||
|---|---|---|---|
| Earnings Date | 1D Returns | 5D Returns | 21D Returns |
| 5/5/2026 | 40.4% | 49.5% | |
| 2/24/2026 | 5.9% | -1.7% | 43.3% |
| 11/5/2025 | 18.0% | 28.8% | 24.4% |
| 8/5/2025 | 28.9% | 9.4% | 18.6% |
| 5/6/2025 | -13.8% | -3.5% | -8.8% |
| 2/25/2025 | 9.8% | 8.6% | 2.2% |
| 11/4/2024 | -13.5% | -5.7% | -4.8% |
| 8/8/2024 | 11.9% | 25.8% | 33.6% |
| ... | |||
| SUMMARY STATS | |||
| # Positive | 13 | 12 | 13 |
| # Negative | 8 | 9 | 7 |
| Median Positive | 11.4% | 14.2% | 18.6% |
| Median Negative | -9.6% | -5.0% | -10.6% |
| Max Positive | 40.4% | 49.5% | 44.9% |
| Max Negative | -24.8% | -29.2% | -42.7% |
SEC Filings
Expand for More| Report Date | Filing Date | Filing |
|---|---|---|
| 03/31/2026 | 05/05/2026 | 10-Q |
| 12/31/2025 | 02/24/2026 | 10-K |
| 09/30/2025 | 11/05/2025 | 10-Q |
| 06/30/2025 | 08/05/2025 | 10-Q |
| 03/31/2025 | 05/06/2025 | 10-Q |
| 12/31/2024 | 02/25/2025 | 10-K |
| 09/30/2024 | 11/04/2024 | 10-Q |
| 06/30/2024 | 08/08/2024 | 10-Q |
| 03/31/2024 | 05/10/2024 | 10-Q |
| 12/31/2023 | 02/21/2024 | 10-K |
| 09/30/2023 | 11/02/2023 | 10-Q |
| 06/30/2023 | 08/11/2023 | 10-Q |
| 03/31/2023 | 05/09/2023 | 10-Q |
| 12/31/2022 | 02/22/2023 | 10-K |
| 09/30/2022 | 11/07/2022 | 10-Q |
| 06/30/2022 | 08/08/2022 | 10-Q |
Recent Forward Guidance
Updated 5/28/2026Latest: Q1 2026 Earnings Reported 5/5/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q2 2026 Revenue | 272.00 Mil | 273.00 Mil | 274.00 Mil | 9.4% | Higher New | Actual: 249.50 Mil for Q1 2026 | |
| Q2 2026 Adjusted EBITDA Margin | 37.0% | 37.5% | 38.0% | 2.7% | 1.0% | Higher New | Actual: 36.5% for Q1 2026 |
| Q2 2026 Non-GAAP diluted net income per share | 0.2 | 0.21 | 0.23 | -12.2% | Lower New | Actual: 0.24 for Q1 2026 | |
| 2026 Revenue | 1.13 Bil | 1.14 Bil | 1.15 Bil | 4.4% | Raised | Guidance: 1.09 Bil for 2026 | |
| 2026 Adjusted EBITDA Margin | 37.0% | 38.0% | 39.0% | 2.7% | 1.0% | Raised | Guidance: 37.0% for 2026 |
| 2026 Adjusted free cash flow margin | 9.0% | 10.5% | 12.0% | -34.4% | -5.5% | Lowered | Guidance: 16.0% for 2026 |
| 2026 Non-GAAP diluted net income per share | 1.1 | 1.15 | 1.2 | 31.4% | Raised | Guidance: 0.88 for 2026 | |
| 2026 Revenue Growth | 26.0% | Higher New | |||||
| 2027 Revenue Growth | 50.0% | Higher New | |||||
Prior: Q4 2025 Earnings Reported 2/24/2026
| Forward Guidance | Guidance Change | ||||||
|---|---|---|---|---|---|---|---|
| Metric | Low | Mid | High | % Chg | % Delta | Change | Prior |
| Q1 2026 Revenue | 249.00 Mil | 249.50 Mil | 250.00 Mil | 5.0% | Higher New | Guidance: 237.50 Mil for Q4 2025 | |
| Q1 2026 Adjusted EBITDA margin | 36.0% | 36.5% | 37.0% | -6.4% | -2.5% | Lower New | Guidance: 39.0% for Q4 2025 |
| Q1 2026 Non-GAAP diluted net income per share | 0.22 | 0.24 | 0.27 | -34.7% | Lower New | Guidance: 0.38 for Q4 2025 | |
| 2026 Revenue | 1.07 Bil | 1.09 Bil | 1.10 Bil | 21.6% | Higher New | Guidance: 896.50 Mil for 2025 | |
| 2026 Adjusted EBITDA margin | 36.0% | 37.0% | 38.0% | -9.4% | -3.8% | Lower New | Guidance: 40.85% for 2025 |
| 2026 Adjusted free cash flow margin | 15.0% | 16.0% | 17.0% | -13.5% | -2.5% | Lower New | Guidance: 18.5% for 2025 |
| 2026 Unlevered adjusted free cash flow margin | 18.0% | 19.0% | 20.0% | ||||
| 2026 Non-GAAP diluted net income per share | 0.75 | 0.88 | 1 | -56.8% | Lower New | Guidance: 2.02 for 2025 | |
Insider Activity
Updated 5/21/2026| # | Owner | Title | Holding | Action | Filing Date | Price | Shares | Transacted Value | Value of Held Shares | Form |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Jenson, Warren | Direct | Sell | 5212026 | 147.62 | 20,000 | 2,952,400 | 4,797,207 | Form | |
| 2 | Steinfort, Matt | Chief Financial Officer | Direct | Sell | 5192026 | 152.50 | 25,000 | 3,812,500 | 87,423,980 | Form |
| 3 | Schneider, Hilary | Direct | Sell | 5192026 | 156.38 | 4,338 | 678,376 | 3,803,631 | Form | |
| 4 | Access, Industries Holdings Llc | LLC | Sell | 5152026 | 150.30 | 3,300,000 | 495,990,000 | 17,973,926 | Form | |
| 5 | Access, Industries Holdings Llc | LLC | Sell | 5112026 | 159.97 | 181,147 | 28,977,237 | 3,468,188,027 | Form |
DOCN Trade Sentinel
OVERWEIGHT (Score 9-10)
CONVICTION RATIONALE
The analysis reveals a highly attractive, probability-adjusted risk/reward skew of 2.77x. The market appears to be mispricing a temporary, macro-level supply risk ('Anti-Alpha') while underappreciating the powerful leading indicators (370% RPO growth) that signal an acceleration in durable, high-margin revenue streams. This qualifies as a high-conviction investment opportunity.
STOCK ARCHETYPE
High-Beta CompounderDigitalOcean's investment profile is defined by its pursuit of high growth in specific, emerging segments (AI, high-spend customers) within a competitive market, rather than stable cash generation or cyclical dynamics. The thesis hinges on the durability of this growth and the strength of its niche competitive moat, aligning perfectly with the 'High-Beta Compounder' archetype.
INVESTMENT THESIS
The primary long thesis for DigitalOcean is a strategic and successful pivot from its historical low-cost, simple compute niche to capturing higher-value, more durable revenue streams. This is driven by attracting larger 'Scaler+' customers and penetrating the high-growth AI/ML market. This mix shift structurally enhances ARPU, profitability, and growth durability.
- Revenue from customers spending >$100k/year grew 41% YoY in Q3 2025, now representing 26% of total revenue.
- Direct AI-related revenue has more than doubled year-over-year for five consecutive quarters.
- Remaining Performance Obligations (RPO), a leading indicator of future revenue, surged 370% YoY to $47M, dramatically outpacing the 16% total revenue growth.
- Management raised full-year 2025 revenue guidance and accelerated long-term growth targets to 18-20% for FY26.
PRIMARY RISK
The most significant near-term risk to the thesis is a global shortage of high-performance GPUs, driven by massive AI-related demand from hyperscalers and enterprises. This could impede DigitalOcean's ability to scale its AI offerings, a critical component of its growth strategy, leading to slower rollouts, higher capital expenditures, and potential margin pressure on these new, high-demand products.
- Industry reports indicate Nvidia is slashing production of certain GPUs by 30-40% in H1 2026 to prioritize high-margin AI accelerators.
- Peer cloud providers like OVH have forecasted 15-20% server price hikes from OEMs, indicating inflationary pressure across the hardware ecosystem.
- This risk is categorized as high likelihood and high impact in the company's risk matrix, with a potential -15% stock impact if it materializes.
| KPI | Threshold | Rationale |
|---|---|---|
| Revenue from Customers >$100k ARR | >35% YoY Growth | This is the primary indicator of the successful pivot to higher-value, more durable revenue streams. Sustaining a high growth rate here is critical to the alpha thesis. |
| Remaining Performance Obligations (RPO) Growth | >50% YoY Growth | As the best leading indicator of future revenue, continued strong RPO growth provides visibility and confidence that the current momentum is sustainable and not a one-off. |
| Net Dollar Retention (NDR) | Consistently >100% | Getting and staying above the 100% expansion threshold is crucial to demonstrate that the company is expanding revenue from its existing customer base, a hallmark of a healthy SaaS model. |
Pivoting Upmarket vs. Core Market Health
BULL VIEW
The successful pivot to larger customers ($100k+ cohort grew 41% YoY) and AI workloads is creating a more profitable, durable business with significant operating leverage.
CORE TENSION
Can accelerating growth in high-value AI/enterprise customers offset potential weakness in the core SMB market and justify the execution risk against giant competitors?
PREVAILING SENTIMENT
Revenue from customers spending over $100,000/year grew 41% YoY in Q3 2025, now representing 26% of total revenue. Remaining Performance Obligations (RPO) surged 370% YoY.
BEAR VIEW
A 99% Net Dollar Retention rate indicates churn in the core SMB base. The company is now fighting larger competitors while facing GPU supply constraints.
| Timeline | Event & Metric To Watch |
|---|---|
February 24, 2026 | Q4 2025 Earnings Call Watch: FY2026 revenue guidance and commentary on Net Dollar Retention (NDR). Any mention of GPU supply chain impact on CapEx or growth. |
April 22-24, 2026 | Google Cloud Next '26 Watch: Announcements of new, simplified IaaS products with predictable, fixed-price billing aimed at the developer/SMB market. |
Q2-Q3 2026 | Competitor Price Hikes Watch: Public announcements of server price increases from OEMs (Dell, Lenovo) or cloud competitors (Vultr, Linode) due to rising infrastructure costs. |
| Date | Event | Stock Impact |
|---|---|---|
2025-08-05 | Q2 2025 Earnings Release Details: Reported quarterly results that beat analyst expectations, signaling strong business momentum heading into the second half of the year. | Surged +28.88% $27.01 -> $34.81 |
2025-10-02 | Deploy 25 London Conference Details: Announced product updates including new GPU offerings (NVIDIA, AMD), an expanded AI Partner Program, and new storage capabilities like Network File System Service. | Surged +7.92% $35.87 -> $38.71 |
2025-11-05 | Q3 2025 Earnings Release Details: Reported Q3 revenue of $230M (+16% YoY), beat estimates. Raised full-year revenue guidance. Highlighted 41% YoY growth from customers spending >$100k. | Surged +18.01% $38.82 -> $45.81 |
2025-12-01 | UBS Global Technology and AI Conference 2025 Details: Management participated in the UBS Global Technology and AI Conference. No major announcements were made. | Muted (-0.34%) $44.52 -> $44.37 |
2025-12-15 | Managed Kubernetes Updates Details: Company blogged a recap of 2025 releases for its managed Kubernetes service, including enhancements for security, autoscaling, and support for multi-node GPUs. | Fell notably by -3.94% $47.66 -> $45.78 |
2026-02-04 | Product & Billing Model Update Details: Company announced a shift to per-second billing for its Droplet virtual machines, effective Jan 1, 2026, to provide more granular cost control for customers. | Surged +8.25% $55.25 -> $59.81 |
Position Sizing
4% - 6%
NORMAL
Stock is in an Explosive Volatility regime (5.45x S&P). While sentiment is Bullish and valuation appears cheap, the 'Low' visibility rating caps conviction. We cap size to Normal to manage drawdown risk from the high volatility.
Diversification Alternatives
OVH.PA
INDUSTRYUnlike DOCN's US-centric revenue, OVHcloud offers geographic diversification with a strong European presence. It also faces similar input cost pressures, providing a good comparable.
AKAM
SECTORAkamai (owner of Linode) is a much larger, more diversified, and consistently profitable entity with a global CDN network. It offers exposure to the same cloud niche but with a stronger balance sheet.
DigitalOcean is re-rating from a niche cloud provider for individual developers to a high-growth 'Agentic Inference Cloud' for AI-native SMBs and enterprises, targeting 30% revenue growth by 2027.
Filter all news through the lens of the company's transformation into a profitable, high-growth AI cloud platform for larger customers.
AI customer ARR growth >100% YoY; Million-dollar customer ARR growth >100% YoY; Net Dollar Retention (NDR) for $1M+ customers >110%; sustained revenue growth acceleration toward the 25%+ exit rate target for 2026.
Deceleration in AI or million-dollar customer ARR growth; decline in Net Dollar Retention Rate below 100%; significant price competition from hyperscalers (AWS, GCP, Azure) targeting the SMB AI market; failure to meet 2026 revenue growth guidance of 21%.
Quarterly fluctuations in the number of small 'learner' developers; benchmark comparisons on single Droplet performance vs. competitors; general cloud market size commentary.
Repricing Catalyst
The rapid expansion into the AI inference market is the primary catalyst. AI customer ARR reached $120 million in Q4 2025, growing 150% YoY. The company is also successfully moving upmarket, with million-dollar customer ARR hitting $133 million, up 123% YoY, and exhibiting zero churn in the last twelve months. Management has raised its outlook, targeting 21% growth in 2026, exiting the year at 25%+, and reaching 30% growth in 2027.
Cloud Infrastructure for SMBs & Developers
$901000.0B TTM (100% of Total) · 60% MarginWhat It Is
Core products include 'Droplets' (scalable virtual machines), Managed Kubernetes, App Platform (PaaS), managed databases (PostgreSQL, MySQL), Spaces (object storage), and specialized GPU compute for AI workloads.
Who Pays & How
Startups, SMBs, and individual developers pay for a simple, predictable, and cost-effective alternative to complex hyperscale clouds. Named AI customers include character.ai, Workato, and Hippocratic AI. Lock-in occurs as applications are built and data is stored on the platform, making migration to another provider costly and time-consuming.
Competition
External Quote Links
| Y Finance | Barrons |
| TradingView | Morningstar |
| SeekingAlpha | ValueLine |
| Motley Fool | Robinhood |
| CNBC | Etrade |
| MarketWatch | Unusual Whales |
| YCharts | Perplexity Finance |
| FinViz |
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