| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 12 | 45.2x | 17.3x | Bottom tier | |
Growth | 87 | 21.4% | 7.1% | Top tier | |
Quality | 69 | 10.7% | 4.5% | Top tier | |
Safety | 63 | 2.0x | 2.6x | Around median | |
Capital Return | 47 | 0.00% | 0.06% | Around median | |
Momentum | 56 | 263.2% | -1.6% | Around median | |
Sentiment | 62 | 11 | 3 | Around median |
The floor: what the company is worth if growth stopped today
92% of today's price is what a buyer pays for growth that has not happened yet.
10-year US Treasury yield 4.96% as of 2026-10-22. Estimates computed from company data and analyst targets, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
DigitalOcean operates an integrated cloud platform aimed at developers and artificial intelligence companies, encompassing compute, storage, databases, Kubernetes, inference, agents, and monitoring tools. The revenue model is largely consumption-based, and the company benefits from running these services on infrastructure it owns and manages across 20 global data centers; therefore, monetization is not limited to renting graphics processing units but extends to higher-value software services such as Inference Engine, knowledge bases, intelligent model routing, storage, and core compute.
In fiscal year 2026 Q2, revenue reached $281.2 million, up approximately 29% year over year, compared with growth of 14% in the prior corresponding period. Gross profit was $154.7 million, equivalent to a calculated gross margin of approximately 55.0%, while net income was $35.4 million and earnings per share were $0.29; the company also recorded $93 million in net new annual recurring revenue, the highest quarterly level in its history.
The business mix reflects a clear shift toward artificial intelligence and higher-spending customers: annual recurring revenue from artificial intelligence customers reached $234 million and grew 212%, with 85% coming from inference and core cloud services rather than dedicated servers. Inference services represented more than 70% of annual recurring revenue from artificial intelligence customers and grew approximately 800%, while the share of the largest spending segments rose from 9% to 23% of total annual recurring revenue. On an adjusted basis, the company recorded an earnings before interest, taxes, depreciation, and amortization margin of 40%, an operating income margin of 24%, and a trailing 12-month free cash flow margin of 17%.
The analyst consensus is “Buy,” with an average price target of $172.73 and a wide range between $140 and $200. The average target is below the 52-week range high of $187.5, while the upper target of $200 exceeds it, reflecting disagreement over how much growth the artificial intelligence platform can convert into revenue and margins. The positive case is based on expected fiscal year 2026 revenue growth of approximately 30.5% and stated confidence in growth exceeding 50% during fiscal year 2027, while the valuation counterbalance lies in the risks associated with the timing of new capacity and lower expected free cash flow margins during expansion.
Figures in the text are as of 2026-08-29; the live price is shown at the top of the page.
Growth is being driven by the expansion of artificial intelligence customers and higher-spending customers, as annual recurring revenue from artificial intelligence customers reached $234 million in fiscal year 2026 Q2 and grew 212%. Annual recurring revenue from customers spending more than $1 million grew 214%, compared with 160% for customers spending more than $500 thousand and 98% for customers spending more than $100 thousand. Based on this momentum, the company raised its fiscal year 2026 revenue outlook to $1.17–$1.18 billion, with a growth rate of at least 35% in fiscal year 2026 Q4.
DigitalOcean launched Inference Engine in late April 2026, and its user count exceeded 6,000 customers by the August 4, 2026 call. Token volume grew 30 times over 60 days, and the share of open-weight models rose from approximately 15% to nearly 75%. The engine provides model routing, prompt caching, evaluations, batch inference, and Model Synthesis, making it an entry point to compute, storage, database, and agent services.
Automated analysis for informational purposes only — not investment advice.
The largest 25 customers represented 20% of annual recurring revenue in fiscal year 2026 Q2, reflecting a broader base than a model dependent on one customer or a few contracts. However, the share of the largest spending segments rose from 9% to 23% of total annual recurring revenue within a year. The company also signed its first nine-figure annual revenue commitment, and remaining performance obligations rose to $894 million with an average duration of 3.7 years, increasing the importance of executing large contracts on schedule.
Management said on August 4, 2026 that demand exceeds available capacity, but it launched the Richmond and Kansas City centers ahead of their target dates. The Memphis center, with capacity of approximately 15 megawatts, remained scheduled for the second half of 2026, while the company secured an additional 20 megawatts targeted to come online in late 2027 and during 2028. Total committed capacity reached approximately 155 megawatts, with most expected to enter service by the end of 2027, but launch timing and the supply chain remain critical factors.
In fiscal year 2026 Q2, revenue was $281.2 million, gross profit was $154.7 million, and net income was $35.4 million. The company recorded an adjusted earnings before interest, taxes, depreciation, and amortization margin of 40%, an adjusted operating income margin of 24%, and adjusted free cash flow of $61 million. For fiscal year 2026, it expects an adjusted earnings before interest, taxes, depreciation, and amortization margin of approximately 39% and an adjusted free cash flow margin of between 11% and 13%, while continuing to generate cash even after principal financing payments, according to management.
The average analyst price target is $172.73, with a “Buy” consensus and a target range between $140 and $200. The average is below the 52-week range peak of $187.5, highlighting the valuation's sensitivity to the realization of the announced artificial intelligence growth. Key factors to monitor include whether fiscal year 2026 revenue reaches the $1.17–$1.18 billion range, whether new capacity comes online on schedule, and whether the company can protect its expected adjusted earnings margin at approximately 39%.