Prediction: DigitalOcean Stock Is Going to Soar After Feb. 24

Core Insights - Artificial intelligence presents a significant opportunity for DigitalOcean, which is expanding its portfolio of AI services tailored for small and mid-sized businesses (SMBs) [1][2]. Group 1: Company Overview - DigitalOcean is valued at $5.7 billion and focuses exclusively on serving SMBs, differentiating itself from larger cloud providers like Amazon and Microsoft [2]. - The company has seen its AI revenue double in each of the last five reported quarters, indicating strong growth potential [3][10]. Group 2: AI Services and Market Position - DigitalOcean provides affordable AI services, making advanced technology accessible to even the smallest businesses, and claims to be 75% cheaper than larger competitors [6]. - The company has developed an AI platform called Gradient, which allows SMBs to utilize large language models from third parties like OpenAI, facilitating AI software development [7]. Group 3: Financial Performance - DigitalOcean generated $659 million in total revenue during the first three quarters of 2025, reflecting a 14.5% year-over-year increase, with significant contributions from its AI business [9]. - The company's operating income doubled to $118.2 million during the same period, showcasing effective cost management alongside revenue growth [11]. Group 4: Stock Valuation - Despite a 41% increase in stock price in 2025 and an additional 27% in early 2026, DigitalOcean's price-to-sales (P/S) ratio stands at 7.2, below its historical average [12]. - The stock's price-to-earnings (P/E) ratio of 24.9 is lower than the Nasdaq-100 technology index's P/E ratio of 31.5, indicating attractive valuation relative to larger companies in the cloud and AI sectors [14]. Group 5: Future Outlook - The upcoming fourth-quarter earnings report on February 24 is anticipated to further boost the stock, especially if AI revenue continues to double and management provides positive forward guidance [15].