DOCN

DigitalOcean

$150.42

-6.41%
May 27, 2026
Bobby Quantitative Model
DigitalOcean Holdings, Inc. is a cloud computing platform that provides on-demand infrastructure and platform tools primarily for developers, startups, and small to medium-sized businesses, operating within the Software - Infrastructure industry. The company has carved out a distinct identity as a developer-friendly, simplified alternative to hyperscale cloud providers, focusing on ease of use and a targeted customer base. The current investor narrative is overwhelmingly driven by explosive, AI-fueled growth, as recent headlines highlight a massive stock surge following a significant upward revision of its long-term revenue forecast, positioning the company at the center of the AI infrastructure boom for its core market.

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DOCN 12-Month Price Forecast

Historical Price
Current Price $150.42
Average Target $150.42
High Target $172.98299999999998
Low Target $127.85699999999999

Wall Street consensus

Most Wall Street analysts maintain a constructive view on DigitalOcean's 12-month outlook, with a consensus price target around $195.55 and implied upside of +30.0% versus the current price.

Average Target

$195.55

8 analysts

Implied Upside

+30.0%

vs. current price

Analyst Count

8

covering this stock

Price Range

$120 - $196

Analyst target range

Buy
2 (25%)
Hold
4 (50%)
Sell
2 (25%)

Insufficient analyst coverage data is available, as the provided data includes estimated EPS and revenue but lacks the consensus recommendation, target price, and distribution of ratings typically found in analyst coverage summaries. This limited visible coverage, despite recent news citing Wall Street targets, suggests the stock may still be transitioning to broader institutional recognition; such a scenario can lead to higher volatility and less efficient price discovery as the market digests transformative news like the recent AI growth surge.

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DOCN Technical Analysis

The stock is in a powerful, sustained uptrend, evidenced by a staggering 1-year price change of +443.98%. With a current price of $158.46, it is trading near the top of its 52-week range, at approximately 95% of the distance between its 52-week low of $25.56 and high of $165.99, indicating extreme momentum but also raising concerns about potential overextension. Recent momentum has accelerated dramatically, with a 1-month surge of +65.89% and a 3-month gain of +149.03%, far outpacing the broader market's performance (SPY +4.84% and +8.15% respectively) and signaling a parabolic move likely driven by a fundamental catalyst. Key technical support now resides near the recent pre-surge levels around $95, while immediate resistance is at the 52-week high of $165.99; a decisive breakout above this level could signal a continuation of the rally, though the stock's high beta of 1.423 indicates it is approximately 42% more volatile than the market, which necessitates careful risk management given the extreme short-term gains.

Beta

1.42

1.42x market volatility

Max Drawdown

-24.1%

Largest decline past year

52-Week Range

$26-$166

Price range past year

Annual Return

+421.9%

Cumulative gain past year

PeriodDOCN ReturnS&P 500
1m+52.0%+4.9%
3m+177.2%+8.9%
6m+237.9%+9.8%
1y+421.9%+26.9%
ytd+207.2%+10.1%

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DOCN Fundamental Analysis

Revenue growth is robust and accelerating, with Q4 2025 revenue of $242.39 million representing an 18.3% year-over-year increase, and sequential quarterly revenue has climbed consistently from $210.7 million in Q1 to the Q4 figure, indicating strong demand momentum. The company is profitable, posting Q4 net income of $25.66 million with a healthy gross margin of 58.7%, and operating margins have shown improvement, with the Q4 operating margin at 16.0% compared to 6.2% in Q1 2024, demonstrating effective scaling. The balance sheet shows a negative debt-to-equity ratio of -25.46, which is an accounting artifact typically stemming from an accumulated deficit (negative shareholder equity), but the company generates positive operating cash flow ($57.28 million in Q4) and has a trailing twelve-month free cash flow of $37.0 million, providing internal funding for its aggressive growth initiatives.

Quarterly Revenue

$242390000.0B

2025-12

Revenue YoY Growth

+0.18%

YoY Comparison

Gross Margin

+0.58%

Latest Quarter

Free Cash Flow

$36996000.0B

Last 12 Months

Revenue & Net Income Trends (2 Years)

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Valuation Analysis: Is DOCN Overvalued?

Given the positive net income, the primary valuation metric is the P/E ratio. The trailing P/E stands at 16.98x, while the forward P/E is significantly higher at 92.16x; this wide gap implies the market is pricing in exceptionally high future earnings growth, likely tied to its AI-driven expansion plans. Peer comparison data is not available in the provided dataset, preventing a direct sector premium/discount analysis. Historically, the stock's current trailing P/E of 16.98x is below its own recent historical range from Q4 2023 through Q3 2025, where it often traded above 40x and even into the hundreds, suggesting that despite the massive price appreciation, the surge in earnings has actually made the stock appear less expensive relative to its own history, though this is contingent on earnings sustainability.

PE

17.0x

Latest Quarter

vs. Historical

Mid-Range

5-Year PE Range -1131x~1343x

vs. Industry Avg

N/A

Industry PE ~N/A*

EV/EBITDA

13.5x

Enterprise Value Multiple