DigitalOcean Holdings (NYSE: DOCN) specializes in providing user-friendly cloud solutions, targeting small-to-medium businesses and startups with services like virtual servers, managed Kubernetes, and storage solutions. Recently, they ventured into AI and machine learning with the launch of the Gradient AI Platform and GPU-powered Droplets in collaboration with AMD. Despite a 7.14% decline in shares over the past year, DigitalOcean reported a 14% revenue growth in Q2 2025, reaching $219 million and raising its full-year revenue target to $888-$892 million. The company’s gross margin improved to 60%, while a high net debt/EBITDA ratio of 4.94× raises concerns. Analysts maintain a ‘Buy’ rating with a 12-month price target of $41.92, indicating potential upside. Key risks include high leverage, negative free cash flow, and intense competition. Conversely, the growth in AI revenue and a loyal developer community presents promising opportunities for future expansion.
Source link
