Cloud computing platforms give businesses access to the tools they need to thrive in the digital age, from simple data storage to complex software development solutions. But over the last couple of years, cloud providers have also started offering new products and services to help businesses develop and deploy artificial intelligence (AI).
The cloud industry is dominated by trillion-dollar technology giants like Amazon and Microsoft, but another company called DigitalOcean(NYSE: DOCN) — which is valued at just $5.7 billion — is making a real splash. It exclusively serves small and mid-sized businesses (SMBs), providing not only cloud services, but an expanding portfolio of AI services, too.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
DigitalOcean’s AI revenue doubled in each of its last five reported quarters, and on Feb. 24, the company will release its operating results for the fourth quarter of 2025 (ended Dec. 31). Its stock is already up 27% in 2026, and here’s why I think the upcoming report will drive even further gains.
Image source: Getty Images.
The cloud industry’s largest providers typically focus on customers with the highest spending potential, leaving SMBs feeling somewhat neglected. DigitalOcean, on the other hand, offers them highly personalized service, clear and transparent pricing, and a simple dashboard that makes deploying cloud services easy. These features are perfect for start-ups and small enterprises with limited financial and technical resources.
DigitalOcean is applying the same strategy to its growing portfolio of AI services, making it affordable for even the smallest businesses to benefit from this revolutionary technology. It operates data centers fitted with advanced chips from suppliers like Nvidia and Advanced Micro Devices, and it allows customers to start with just one chip and scale up as needed. While some larger cloud providers also offer fractional capacity, DigitalOcean claims to be a whopping 75% cheaper.
DigitalOcean also built an AI platform called Gradient, where SMBs can access the latest large language models (LLMs) from third parties like OpenAI, which they can use to accelerate AI software development. Plus, Gradient helps SMBs create and deploy AI agents, which could be a major growth area in the future.
According to DigitalOcean’s latest annual “Currents” survey, 53% of SMBs that have deployed AI agents so far experienced tangible time savings, and 44% said using agents unlocked entirely new business capabilities. Over one-third of SMBs that haven’t deployed AI agents yet plan to start doing so in 2026, and DigitalOcean will be there to support them on their journey.
DigitalOcean generated $659 million in total revenue during the first three quarters of 2025 (ended Sept. 30), which was a 14.5% year-over-year increase. It marked an acceleration from the 12.4% growth the company produced in the first three quarters of 2024, and a lot of that momentum came from its budding AI business.
DigitalOcean’s AI revenue has doubled year over year in each of the last five reported quarters, and management’s guidance suggests it doubled yet again in the fourth quarter. The company hasn’t disclosed exactly how much AI revenue it generates, but at these growth rates, it won’t be long before it represents a large part of the overall business.
DigitalOcean managed to expand its AI product portfolio and achieve accelerated revenue growth while reducing its operating expenses during the first three quarters of 2025, which is extremely impressive. As a result, with more money coming in and less money going out, the company’s operating income doubled to $118.2 million for the period.
Even though DigitalOcean stock soared by 41% in 2025 and by a further 27% in the early stages of 2026, it still trades at an attractive price-to-sales (P/S) ratio of 7.2, which is below its average of 8.1 since the company went public in 2021.
Data by YCharts.
Plus, based on DigitalOcean’s trailing-12-month generally accepted accounting principles (GAAP) earnings of $2.50 per share over the last four reported quarters, its stock is trading at a price-to-earnings (P/E) ratio of 24.9, making it far cheaper than the Nasdaq-100 technology index, which trades at a P/E ratio of 31.5. In other words, DigitalOcean is attractively valued relative to many of the larger companies in the cloud and AI industries.
This sets the stage for further upside in DigitalOcean stock from here, and the company’s upcoming fourth-quarter earnings report on Feb. 24 could be the spark that ignites the rally. If its AI revenue doubles yet again as expected, and management puts forward another round of bullish forward guidance, I think investors will pounce on this stock and drive its valuation much higher.
Before you buy stock in DigitalOcean, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and DigitalOcean wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $414,554!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,120,663!*
Now, it’s worth noting Stock Advisor’s total average return is 884% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of February 15, 2026.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, DigitalOcean, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
Prediction: DigitalOcean Stock Is Going to Soar After Feb. 24 was originally published by The Motley Fool
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
ThePostMaster
