DigitalOcean’s (NYSE: DOCN) stock price has suffered for years as competition cut into its growth outlook, but the times are changing. Analysts at Morgan Stanley highlighted the deep-value opportunity when firm analysts upgraded the stock to Overweight. They view the stock as a deep value relative to peers, trading at only 20x earnings versus an average near 25x, with a sizeable catalyst ahead. The cloud service provider gets little to no credit for its position in the AI and machine learning industry but is well-positioned to profit and grow with it.
DigitalOcean’s large clients demand more services and capability quarterly, and the company is executing. The critical detail is that it does so without impacting its well-established core developer business, whose clients also want service and capability to advance. DigitalOcean’s business attractions include a developer-friendly platform with easy-to-use tools, a simplified cloud structure, and cost-saving services for smaller businesses. Those include serverless computing, a service that allows developers to run code without the cumbersome server management. The takeaway is that DigitalOcean is set up to grow and scale with its customers, who include numerous small and start-up developers working diligently to advance AI.
