DigitalOcean Holdings, Inc. (DOCN): A Bull Case Theory

Core Thesis - DigitalOcean Holdings, Inc. (DOCN) is positioned for growth as artificial intelligence adoption accelerates, particularly among startups and small-to-medium businesses, offering a developer-first alternative to larger cloud providers [2][3]. Company Overview - DigitalOcean operates an agentic inference cloud platform across North America, Europe, Asia, and internationally, focusing on simplicity, cost efficiency, and developer accessibility [2][3]. Market Positioning - Unlike major platforms like Amazon Web Services and Microsoft Azure, DigitalOcean targets a distinct segment that resonates with emerging AI-native companies lacking the resources to navigate complex cloud environments [3]. Growth Catalysts - A significant catalyst for DigitalOcean is Nvidia Corporation's decision to step back from its own cloud business, which allows DigitalOcean to strengthen partnerships and expand its AI infrastructure offerings [4]. - The company has begun deploying Nvidia H100 GPUs and building an integrated AI stack for SMB customers, with AI-related services showing triple-digit growth for multiple consecutive quarters [4]. Sentiment and Market Dynamics - Short interest in DigitalOcean is at 14.5% of float, the highest level since 2023, creating potential for a short-covering rally if execution improves and growth reaccelerates [5]. - Options pricing remains relatively inexpensive, indicating that the market may not be fully pricing in the potential for a stronger growth phase [5]. Historical Performance - DigitalOcean's stock price has appreciated approximately 105% since May 2025, reflecting positive sentiment around its developer-first cloud strategy and upmarket expansion [6].