Is DOCN a good stock to buy? We came across a bullish thesis on DigitalOcean Holdings, Inc. on Investment Management Academy’s Substack. In this article, we will summarize the bulls’ thesis on DOCN. DigitalOcean Holdings, Inc.’s share was trading at $151.91 as of May 28th. DOCN’s trailing and forward P/E were 66.63 and 147.06 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 is presented as a rapidly re-rating cloud infrastructure company benefiting from accelerating AI inference adoption across its developer and mid-market customer base. The company operates a usage-based cloud platform serving developers, startups, and scaling businesses, with strong traction in higher-value cohorts now driving the investment case.
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DigitalOcean’s digital banking, retail-like cloud simplicity model is less relevant; main is AI inference cloud positioning under its Gradient platform, enabling predictable deployment of AI applications. Bull case centers on customers expanding spend, with net dollar retention reaching 102% for $100K+ users, 106% for $500K+, and 115% for $1M+ accounts, contradicting the SMB churn narrative. Management argues AI-native workloads are shifting from training to inference, a structurally recurring demand layer aligned with DigitalOcean’s cost-efficient infrastructure.
The stock has already re-rated sharply, trading around $87 versus a March 2026 initiation at $52.93, exceeding the $78.04 base target (+32%) and approaching the $93.66 upside case (+58%). Revenue growth is expected to accelerate toward 21% in FY26 and 30% in FY27 with expanding Scalers+ adoption. Margin expansion and operating leverage support a potential Rule of 50 profile by 2027 under upside conditions.
Key catalysts include Q1 2026 AI adoption metrics, GPU usage, and product launches such as Gradient Agent Kit and OpenClaw deployments. Risks include hyperscaler pricing pressure and capacity timing, though retention and enterprise-grade AI workloads mitigate downside. Overall, DigitalOcean is increasingly viewed as a credible AI inference cloud winner with asymmetric upside if AI-driven ARPU expansion sustains over the long term outlook.
Previously, we covered a bullish thesis on DigitalOcean Holdings, Inc. (DOCN) by Rene Sellmann in May 2025, which highlighted SMB-focused cloud, improving upmarket expansion, and rising customer cohorts. DOCN’s stock price has appreciated by approximately 427.09% since our coverage. Investment Management Academy shares a similar view but emphasizes AI inference-driven re-rating, accelerating NDR, and Gradient-led growth narrative.
DigitalOcean Holdings, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held DOCN at the end of the first quarter which was 31 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.
