DigitalOcean’s NYSE: DOCN The stock price has suffered over the years as competition cuts its growth outlook, but times are changing. A Morgan Stanley analyst highlighted a deep-value opportunity when firm analysts Upgraded stock To overweight. They see the stock as deeply valued relative to peers, trading at just 20x earnings compared to an average of closer to 25x, with a big catalyst ahead. Cloud service providers get little or no credit for their position in the AI and machine learning The industry however is well positioned for profitability and growth.
DigitalOcean Today
- 52-week range
- $26.63
▼
$44.80
- P/E ratio
- 44.97
- Price target
- $41.70
DigitalOcean’s large customers demand more services and capacity quarterly, and the company is implementing it. The critical detail is that it does so without affecting its well-established core developer business, whose customers also want to expand service and capabilities. DigitalOcean’s business attractions include a developer-friendly platform with easy-to-use tools, a simple cloud architecture, and cost-saving services for small businesses. These include serverless computing, a service that allows developers to run code without cumbersome server management. The takeaway is that DigitalOcean is set up Growth and scale Along with its customers, which include many small and start-up developers who are working diligently to advance AI.
Morgan Stanley put a $41 target on the stock, and other recent revisions agree. Analysts at Stifel Nicolaus issued another significant revision: a price target increase to December 2025. The firm cited Digital Oceans, among other software firms, as having the ability to monetize AI. Analysts believe that increased availability and rapid adoption will sustain industry growth. Their $40 price target is below the mid-January consensus of $41.70 but a solid figure that anticipates upside and is consistent with trends. The consensus target for DigitalOcean has risen steadily through 2024 and tracked higher in the first weeks of 2025, with a minimum growth forecast of 12% this year.
Digital ocean growth is stable with low bar to hurdle
DigitalOcean stock forecast today
$41.70
Up 9.08%catch up
Based on 11 analyst ratings
| High forecast | $48.00 |
|---|---|
| Average forecast | $41.70 |
| Less predictable | $34.00 |
DigitalOcean’s growth slowdown is over, and the bar is set low for Q4 and 2025, providing an opportunity for outperformance and a catalyst for share prices. The 2024 results show steady growth at a low-double-digit range, running between 10% and 13%. After revisions from 100% of covering analysts, the consensus for Q4 is at the lower end of the range. However, an acceleration is expected in 2025.
The Forecast for 2025 The results were cut significantly at the end of 2024 but expect an acceleration of up to 13% and are likely too cautious. The industry is expected to grow at a high 15% pace in 2025, and even this estimate may be conservative. Digitization, including AI applications and IoT, is being aided by the rapid expansion of 5G capacity globally.
DigitalOcean institutional investors are driving price action in 2025
DigitalOcean’s Institutional investors Ownership of around 50% of the shares, shows a relatively high confidence. However, the 2024 activity corresponds to range-bound market conditions, with them buying when the stock was down and selling when it was up. If this continues into 2025, markets may not move higher. However, with growth expected to stabilize and accelerate by the end of the decade, institutions will likely reverse their stance in 2025 and return to a more bullish posture.
The technical outlook is improving. Market hit for DOCN stock A low point in late 2023 and shows rising support within the established range. Price action in mid-2024 and early 2025 is consistent with that outlook, including sharp reversals in indicators such as the MACD, Stochastic, and closely watched moving averages. Together, they amount to a solid signal, but there is risk. Resistance at the $42.50 and $50 levels could extend gains.
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