DigitalOcean is flying under the radar. Trading under $30 per share with a market cap below $3 billion, it sits at less than four times revenue. By contrast, CoreWeave, a larger but cash-burning competitor, trades at roughly 20 times revenue. That valuation gap alone demands a closer look.
Last year, DigitalOcean pulled in $781 million in revenue, growing 13% year over year with a solid 42% EBITDA margin. Net income hit $84 million. Meanwhile, CoreWeave is still cash-flow negative, hemorrhaging capital to build out infrastructure. Profitability counts in a market that has punished unprofitable cloud plays repeatedly.
DigitalOcean’s AI push is heating up fast. Annual recurring revenue from AI-related services soared over 160% compared to last year. The company has carved out a developer-first niche, offering simplified GPU access and launching a GenAI platform in early 2025. Serving more than 600,000 customers, DigitalOcean spreads risk across a diverse base. That is a stark contrast to CoreWeave’s heavy reliance on a few large enterprise contracts, which raises concentration concerns.
If DigitalOcean reached just half CoreWeave’s revenue multiple at 9 times sales, the stock would trade around $56 nearly double from current levels. Push that valuation to 12 times revenue, a more fitting AI cloud premium, and shares could hit $84 tripling today’s price. Profitability adds to the allure. DigitalOcean is not just growth it is sustainable growth.
Behind the buzz about AI cloud wars and big names, DigitalOcean’s undervalued position with solid fundamentals makes it a sleeper pick. It is quietly building a platform that could disrupt developer-focused AI infrastructure, and the market has yet to price that in fully.
Some of the bullish thesis and community insights discussed here were inspired by a popular WallStreetBets Reddit post from today.
https://www.sec.gov/edgar/browse/?CIK=1514816&owner=exclude
https://www.reuters.com/technology/ai-cloud-computing-market-shifts-2025-07-20
https://www.bloomberg.com/markets/stocks
https://investors.coreweave.com/
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