Is DOCN a good stock to buy? We came across a bullish thesis on DigitalOcean Holdings, Inc. on Thinking Tech Stocks’s Substack. In this article, we will summarize the bulls’ thesis on DOCN. DigitalOcean Holdings, Inc.’s share was trading at $89.57 as of April 20th. DOCN’s trailing and forward P/E were 35.54 and 93.46 respectively according to Yahoo Finance.
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DigitalOcean Holdings, Inc., through its subsidiaries, operates an agentic inference cloud platform in North America, Europe, Asia, and internationally. DOCN delivered a standout fourth-quarter 2025 earnings report on February 24, 2026, significantly surpassing Wall Street expectations. Revenue reached $242.39 million, up 18% year-over-year and above the $237.7 million consensus, while non-GAAP EPS of $0.44 beat the expected $0.38.
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CEO Paddy Srinivasan outlined a robust growth trajectory, projecting full-year 2026 revenue between $1.075 billion and $1.105 billion, implying roughly 21% growth, with 25% growth expected by year-end and 30% by 2027. Annual Recurring Revenue (ARR) from AI clients surged 150% to $120 million, with large clients contributing $133 million, a 123% increase, reflecting strong traction with high-value customers. The record $51 million in incremental organic ARR underscores DigitalOcean’s expanding footprint.
This growth is powered by the Agentic Inference Cloud, which integrates high-performance AI infrastructure with general-purpose cloud services, enabling AI-native companies to move seamlessly from model training to production. Customers have launched over 19,000 AI agents, with more than 7,000 in production, and the company has secured 30 megawatts of additional data center capacity to meet demand.
DigitalOcean’s strategy of leasing GPU and data center hardware, rather than taking on debt to own equipment outright, positions it uniquely against heavily leveraged neocloud competitors. This flexibility allows adoption of next-generation inference chips like Cerebras’ WSE-3 without the burden of obsolete assets, enhancing efficiency and cost-effectiveness.
By focusing on AI inference instead of training, DigitalOcean captures recurring, predictable revenue with high margins. Its platform delivers end-to-end services—from virtual private clouds to managed databases and generative media hosting—creating a sticky, scalable customer base. With strong revenue growth, expanding AI adoption, and a flexible, capital-efficient strategy, DigitalOcean is well-positioned to capture long-term upside in the high-performance cloud and AI infrastructure markets, making it a compelling investment opportunity.
Previously, we covered a bullish thesis on DigitalOcean Holdings, Inc. (DOCN) by Rene Sellmann in May 2025, highlighting its capital-disciplined, customer-focused cloud approach, growth in higher-value accounts, and strong free cash flow. DOCN’s stock price has appreciated by approximately 210.79% since our coverage. Thinking Tech Stocks shares a similar view but emphasizes DOCN’s AI-driven Agentic Inference Cloud, record ARR growth, and flexible hardware leasing.
DigitalOcean Holdings, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held DOCN at the end of the fourth quarter which was 30 in the previous quarter. While we acknowledge the risk and potential of DOCN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DOCN and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
