DigitalOcean’s New York Stock Exchange: DOCN The share price has been falling for years as competition limited its growth prospects, but times are changing. Morgan Stanley analysts highlighted the potential for strong value when the firm’s analysts upgraded the stock to Overweight. They view the stock as a great value relative to its peers: it trades at just 20 times earnings compared to an average of about 25 times earnings, and there’s a significant catalyst ahead. The cloud services provider doesn’t get much credit for its position in the artificial intelligence and machine learning industry, but is well positioned to profit and grow with it.
Digital ocean today
- 52 week range
- $26.63
▼
$44.80
- P/E ratio
- 44.97
- Target price
- $41.70
DigitalOcean’s large customers demand more services and capabilities every quarter, and the company delivers. The important detail is that this does not impact its well-established core developer business, where customers also want service and development opportunities. DigitalOcean’s business appeals include a developer-friendly platform with easy-to-use tools, a simplified cloud structure, and cost-effective services for small businesses. These include serverless computing, a service that allows developers to run code without the cumbersome management of a server. The bottom line is that DigitalOcean is set to grow and scale with its customers, which include numerous small and early-stage developers working hard to advance artificial intelligence.
Morgan Stanley put a $41 price target on the stock and other recent revisions are in line. Analysts at Stifel Nicolaus published another notable change: a target price increase for December 2025. The firm cited the ability of DigitalOcean, among other software companies, to monetize AI. Analysts believe increased availability and faster adoption will fuel industry growth. Their $40 price target is below the mid-January consensus of $41.70, but it is a solid number that suggests upside and is in line with trends. The consensus target for DigitalOcean has risen steadily throughout 2024 and will rise in the early weeks of 2025, forecasting a minimum upside of 12% this year.
DigitalOcean’s growth is stabilizing: the low bar is an obstacle
DigitalOcean stock forecast today
$41.70
Growth potential 9.08%Hold
Based on ratings from 11 analysts
| High forecast | $48.00 |
|---|---|
| Average forecast | $41.70 |
| Low forecast | $34.00 |
DigitalOcean Stock Forecast Details
DigitalOcean’s growth slowdown is over, with the bar set low for the fourth quarter and 2025, presenting an opportunity to outperform and catalyze higher stock prices. Results for 2024 show growth rates have stabilized in the double-digit range at 10% to 13%. After revisions, 100% of analysts surveyed place consensus for the fourth quarter at the lower end of the range. However, acceleration is expected in 2025.
Outcome forecasts for 2025 were cut significantly at the end of 2024, but they expect an acceleration of up to 13% and are probably being too cautious. The industry is expected to grow at a higher rate (15%) in 2025, and this estimate may also be cautious. Digitalization, including artificial intelligence applications and the Internet of Things, is gaining momentum with the rapid expansion of 5G capabilities around the world.
DigitalOcean Institutional Investors Will Drive Price Action in 2025
Institutional investors in DigitalOcean show relatively high conviction, holding about 50% of the shares. However, activity in 2024 follows range-bound market conditions: buying when stocks fall and selling when they rise. If this continues into 2025, the market may not rise higher. However, as growth stabilizes and is expected to accelerate towards the end of the decade, institutions are likely to change their stance in 2025 and return to a more optimistic stance.
The technical outlook is improving. The DOCN stock market bottomed out at the end of 2023 and is showing increasing support within the established range. Price action in mid-2024 and early 2025 is consistent with this forecast, including bullish swings in indicators such as the MACD, stochastics, and closely watched moving averages. Together they represent a reliable signal, but there is a risk. Resistance at $42.50 and $50 could limit gains.
Before you consider DigitalOcean, you should hear this.
MarketBeat tracks Wall Street’s top-rated and best-performing analysts daily and the stocks they recommend to their clients. MarketBeat has identified five stocks that top analysts are quietly whispering to their clients to buy now, before the broader market takes hold… and DigitalOcean wasn’t on the list.
While DigitalOcean currently has an analyst rating of Hold, the top-ranked analysts think these five stocks are Strong Buys.
View five stocks here
Wondering where to start (or end) with AI stocks? These 10 common stocks can help investors build long-term wealth as artificial intelligence continues to advance in the future.
Get this free report