Is This $50 Cloud Stock a Good Buy Now?

Core Insights - Cloud computing is entering a growth phase driven by AI workloads, leading investors to be more selective about value opportunities [1] - DigitalOcean (DOCN) is a notable mid-sized cloud platform showing strong growth and profitability, particularly benefiting from AI-driven demand [1] Company Performance - In Q3 2025, DigitalOcean reported revenue of $230 million, a 16% year-over-year increase, marking its highest growth since Q3 2023 [5] - The company achieved its highest organic incremental annual recurring revenue (ARR) of $44 million, bringing total ARR to $919 million [5] - DigitalOcean's gross margin improved to 60%, and adjusted EBITDA margin reached 43%, exceeding internal targets [5] Client Growth - Revenue from clients paying over $100,000 per year increased by 41% year-over-year, now representing 26% of total revenue [6] - Customers with an annual run rate exceeding $500,000 grew by 55%, while those with an ARR over $1 million increased by 72% to $110 million [6] - Many clients signed eight-figure committed contracts post-quarter, enhancing revenue visibility and confidence in future growth [6] AI Revenue - DigitalOcean's Gradient AI agentic cloud is gaining traction among AI and digital-native enterprise customers [7] - For five consecutive quarters, AI revenue has more than doubled year-over-year, driven by increased inference workloads on the platform [7]