DigitalOcean has experienced explosive growth driven by AI demand, with its stock surging 360% over 12 months. The company is building AI data centers and reported a tenfold increase in remaining performance obligations to $800 million. While trading at a premium valuation (P/S ratio of 15.4), its forward P/S ratio of 8.1 based on 2027 guidance suggests potential value. The Aug. 4 earnings report could be pivotal, with management expected to raise 2027 revenue growth guidance above the previously stated 50%.
Axe note: DigitalOcean’s rapid AI-driven growth is impressive, but prudent investors should await clearer signals from the upcoming earnings.