Here’s What Drives DigitalOcean Holdings’ (DOCN) Earnings Growth

Frontier Capital Management, an investment management company, released its “Frontier Small Cap Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Class N shares of the fund returned -14.43% in the first quarter, compared to -11.12% for the benchmark Russell 2000 Growth Index. The fund returned -14.50% for the 12 months ended March 31, 2025, compared to the benchmark return of -4.86%. US equities traded lower in the first quarter, mainly during the last week of the quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first quarter 2025 investor letter, Frontier Small Cap Growth Fund highlighted stocks such as DigitalOcean Holdings, Inc. (NYSE:DOCN). DigitalOcean Holdings, Inc. (NYSE:DOCN) is a cloud computing platform that offers on-demand infrastructure and platform tools for developers. The one-month return of DigitalOcean Holdings, Inc. (NYSE:DOCN) was -2.14%, and its shares lost 10.92% of their value over the last 52 weeks. On July 7, 2025, DigitalOcean Holdings, Inc. (NYSE:DOCN) stock closed at $28.87 per share, with a market capitalization of $2.628 billion.

Frontier Small Cap Growth Fund stated the following regarding DigitalOcean Holdings, Inc. (NYSE:DOCN) in its first quarter 2025 investor letter:

“The market volatility has created several opportunities to invest in companies at prices we find attractive, and thus we have initiated new positions in a variety of industries. Examples include CACI International Inc Amentum Holdings, Inc., Essential Properties Realty Trust, Inc., and DigitalOcean Holdings, Inc. (NYSE:DOCN). DigitalOcean’s new CEO has increased investment in its service offering, which should enable the company to grow its share of wallet and reduce churn in the customer base. As use cases for AI develop, we expect more developers will use DigitalOcean’s services to build their businesses in a more cost effective manner, driving increasing earnings for years to come.”

DigitalOcean Holdings, Inc. (DOCN): Among Billionaire George Soros’ Small-Cap Stocks with Huge Upside Potential

A close up view of a laptop computer, the cloud computing platform displayed on the screen.

DigitalOcean Holdings, Inc. (NYSE:DOCN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held DigitalOcean Holdings, Inc. (NYSE:DOCN) at the end of the first quarter, compared to 18 in the previous quarter. DigitalOcean Holdings, Inc.’s (NYSE:DOCN) first quarter revenue increased 14% year-over-year to $211 million. While we acknowledge the potential of DigitalOcean Holdings, Inc. (NYSE:DOCN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered DigitalOcean Holdings, Inc. (NYSE:DOCN) and shared the list of AI stocks that will skyrocket. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of DOCN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.