In a report released yesterday, Josh Baer from Morgan Stanley maintained a Buy rating on DigitalOcean Holdings, with a price target of $175.00.
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Josh Baer has given his Buy rating due to a combination of factors tied to DigitalOcean’s accelerating growth and expanding capacity. He notes that management is nearly doubling infrastructure capacity, with 60 MW slated for 2027, well above prior expectations, and is still pursuing further additions in 2027–2028, which underpins a long-term growth outlook stronger than what the market had been modeling.
At the same time, Baer highlights that revenue, ARR, and net new ARR are all beating and quickening, particularly in AI customers where ARR is growing rapidly, supporting confidence in the company’s Agentic Inference Cloud strategy and competitive positioning. Together with raised revenue growth guidance for 2026 and 2027, improved EBITDA margin targets, and a higher price target of $175 that reflects this enhanced capacity and monetization trajectory, these dynamics justify his positive stance despite some near-term pressure on free cash flow from growth investments.
In another report released today, Bank of America Securities also reiterated a Buy rating on the stock with a $200.00 price target.