DigitalOcean Holdings (DOCN) AI Stock Analysis

• Market Cap: $5.51B
• Dividend Yield: N/A
• Average Volume (3M): 1.90M
• Price to Earnings (P/E): 24.4
• Beta (1Y): 1.63
• Revenue Growth: 14.20%
• EPS Growth: 204.86%
• Country: US
• Employees: 1,210
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.54
• Shares Outstanding: 91,492,140
• 10 Day Avg. Volume: 2,737,224
• 30 Day Avg. Volume: 1,898,902
• PEG Ratio: 0.12
• Price to Book (P/B): -15.38
• Price to Sales (P/S): 4.00
• P/FCF Ratio: 32.45
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: 7.51
• Enterprise Value/Gross Profit: 12.62
• Enterprise Value/Ebitda: 19.03
• 1Y Price Target: $57.10
• Price Target Upside: -5.23% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 1.95
• Revenue Forecast (FY): $1.07B

• Rating: 76 Outperform
• Price Target: $67.00 ▲(11.20% Upside)

The score is driven primarily by strong technical momentum and a constructive earnings outlook with raised guidance and accelerating ARR/AI demand. These positives are tempered by meaningful balance-sheet risk from negative equity/high leverage and a mid-range valuation with no dividend support.

Positive Factors

Free Cash Flow Strength

A nearly 195% TTM increase in free cash flow reflects durable cash-generation ability. Strong FCF supports capital allocation for data centers, GPU capacity, debt reduction or strategic hires, giving the company flexibility to fund growth initiatives and weather cyclical software spending dips.

Improved Profitability and Margins

Sustained gross margins near 60% and a materially improved net margin signal an efficient cost structure and pricing power. Persistent margin expansion enhances cash conversion and reinvestment capacity, improving resilience and ability to scale platform services profitably over the medium term.

AI Demand and Capacity Buildout

Consecutive quarters of >2x AI revenue growth indicate structural demand from AI-native customers. Coupled with secured incremental data center/GPU capacity, this positions the company to capture durable, higher-value workload demand and diversify revenue toward faster-growing use cases.

Negative Factors

High Leverage / Negative Equity

Negative shareholders' equity and high leverage create persistent financial fragility, constraining strategic options. Debt servicing and covenants can limit investment pacing, raise refinancing risk in stress periods, and reduce optionality for M&A or large capital projects over the medium term.

Stagnant Net Dollar Retention

A net dollar retention near 100% implies limited upsell and expansion within the installed base. Over time, sub-100% expansion pressure forces heavier new customer acquisition to sustain growth, raising marketing costs and making revenue growth more lumpy and dependent on landing new higher-spend accounts.

Senior Tech Leadership Turnover

Departure of the chief product/technology officer creates execution risk for product roadmaps, platform reliability and AI/GPU initiatives. Leadership turnover can slow delivery of strategic features, complicate talent retention, and temporarily impede coordination of engineering investments critical for long-term competitive positioning.

DigitalOcean Holdings Business Overview & Revenue Model

Company Description

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. Its platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and medium size businesses. The company offers infrastructure solutions across compute, storage, and networking, as well as enables developers to extend the native capabilities of its cloud with fully managed application, container, and database offerings. Its users include software engineers, researchers, data scientists, system administrators, students, and hobbyists. The company's customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and others. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.

How the Company Makes Money

DigitalOcean generates revenue primarily through a subscription-based model, where customers pay for cloud services on a usage basis. Key revenue streams include payments for Droplets, Kubernetes services, managed databases, and object storage. The company also offers additional services such as monitoring and networking solutions, which further contribute to its earnings. DigitalOcean's pricing is designed to be transparent and predictable, appealing to developers and businesses looking for cost-effective solutions. Significant partnerships with educational platforms and developer communities enhance its outreach and customer acquisition, driving recurring revenue and customer loyalty.

DigitalOcean Holdings Financial Statement Overview

Summary

Strong cash generation (free cash flow growth +194.55% TTM; high cash conversion) and improved profitability (TTM net margin 29.15%) support a solid score. However, the balance sheet is a clear risk due to negative equity and high leverage, which materially offsets operating progress.

Income Statement

DigitalOcean Holdings shows a solid revenue growth trajectory with a TTM revenue growth rate of 3.74%. The company has improved its profitability significantly, with a TTM net profit margin of 29.15% compared to 10.82% in the previous year. Gross profit margin remains stable around 59.5%, indicating efficient cost management. However, the EBIT margin is relatively low at 13.83%, suggesting room for operational efficiency improvements.

Balance Sheet

The balance sheet reflects high leverage, with a negative debt-to-equity ratio due to negative stockholders' equity, indicating financial instability. The return on equity is negative, highlighting inefficiencies in generating returns from equity. Despite these challenges, the company has managed to maintain a stable asset base.

Cash Flow

The cash flow statement is strong, with a significant increase in free cash flow growth rate at 194.55% TTM. The operating cash flow to net income ratio is nearly 1, indicating robust cash generation relative to net income. The free cash flow to net income ratio is also high at 85.43%, suggesting effective cash management and potential for reinvestment or debt reduction.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	863.96M	780.62M	692.88M	576.32M	428.56M	318.38M
Gross Profit	514.40M	465.94M	408.92M	364.39M	257.97M	172.85M
EBITDA	341.11M	236.86M	153.59M	86.74M	73.92M	46.53M
Net Income	251.87M	84.49M	19.41M	-27.80M	-19.50M	-43.57M
Balance Sheet
Total Assets	1.73B	1.64B	1.46B	1.82B	2.10B	430.25M
Cash, Cash Equivalents and Short-Term Investments	236.56M	428.45M	411.77M	864.23M	1.71B	100.31M
Total Debt	1.59B	1.70B	1.66B	1.64B	1.46B	259.68M
Total Liabilities	1.80B	1.84B	1.77B	1.77B	1.52B	502.35M
Stockholders Equity	-69.62M	-202.96M	-313.70M	47.57M	578.20M	-72.09M
Cash Flow
Free Cash Flow	169.29M	96.20M	110.13M	74.94M	24.02M	-57.35M
Operating Cash Flow	327.74M	282.73M	234.94M	195.15M	133.11M	58.46M
Investing Cash Flow	-185.92M	-94.81M	401.15M	-1.15B	-113.61M	-115.63M
Financing Cash Flow	-346.68M	-76.45M	-468.90M	-610.36M	1.59B	124.03M

DigitalOcean Holdings Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 60.25
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DOCN, the sentiment is Positive. The current price of 60.25 is above the 20-day moving average (MA) of 53.29, above the 50-day MA of 49.22, and above the 200-day MA of 36.92, indicating a bullish trend. The MACD of 2.54 indicates Negative momentum. The RSI at 70.54 is Negative, neither overbought nor oversold. The STOCH value of 75.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DOCN.

DigitalOcean Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATEN	79 Outperform	$1.30B	26.59	23.88%	1.33%	10.27%	3.52%
DOCN	76 Outperform	$5.51B	24.45	―	―	14.20%	204.86%
DLO	73 Outperform	$4.29B	24.15	35.56%	―	22.02%	12.42%
AVPT	65 Neutral	$2.67B	-1,362.64	0.58%	―	24.71%	99.52%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
TENB	61 Neutral	$2.72B	-80.57	-8.95%	―	11.05%	45.23%

DigitalOcean Holdings Corporate Events

DigitalOcean’s CTO Bratin Saha Resigns Amid Stability

On November 20, 2025, Bratin Saha announced his resignation as Chief Product and Technology Officer of DigitalOcean Holdings, effective November 26, 2025, to pursue other opportunities. His departure is amicable and not due to any disagreements with the company. DigitalOcean reaffirmed its financial guidance for the fourth quarter and full fiscal year 2025, indicating stability in its financial outlook despite the leadership change.

The most recent analyst rating on (DOCN) stock is a Buy with a $49.00 price target. To see the full list of analyst forecasts on DigitalOcean Holdings stock, see the DOCN Stock Forecast page.