Key Takeaways
- DigitalOcean shares fell 36% in the past month as worries about how CoreWeave and Nebius fund their AI build-outs hit the whole group.
- The drop looks like guilt by association, since DigitalOcean’s own news through the month was good.
- Third-quarter revenue grew 40%, and management now expects more than 60% growth in 2027.
- The stock looks like a buy after the drop, though its spending on new capacity is the risk to watch.
DigitalOcean (DOCN) is down 36% in the past month, and very little of that had to do with DigitalOcean.
AI cloud stocks were sold as a group on fears about how they fund their build-outs, with CoreWeave (CRWV) and Nebius (NBIS) at the center of it.
CoreWeave’s debt sank the whole group
The worst day came on Oct. 14, when a chart of CoreWeave’s finances went viral on X. CoreWeave paid for much of its build-out with debt, and DigitalOcean went down with it that day. That was the same morning Oppenheimer raised its price target on DigitalOcean to $220 from $190.
The fear came back on Oct. 22. CoreWeave’s bond yields spiked, Bernstein warned of an $85 billion funding gap at CoreWeave, and Nebius took a $3.5 billion loan from Citi. Over the month, CoreWeave is down 44% and Nebius 42%.
Most analysts stuck with DigitalOcean. Piper Sandler upgraded it to Overweight on Oct. 21 because of the pullback, and Citi called the risk/reward “compelling” going into earnings.
40% growth, and speeding up
On Nov. 3, DigitalOcean reported its fifth straight quarter of faster growth. Revenue grew 40% to $321 million, and AI customer ARR grew 288% to $376 million.
CEO Paddy Srinivasan said customers spending over $100,000 a year now make up 41% of revenue, and that “they are adopting the platform.”
Management now expects more than 60% revenue growth in 2027. That’s more than analysts expected going in:
The consensus had revenue rising from $1.18 billion this year to $1.82 billion in 2027, about 54% growth. If management delivers, those estimates have room to rise.
TIKR tracks 17 analysts on DigitalOcean. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on DigitalOcean, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See DigitalOcean’s Analyst Ratings
Is it time to load up?
DigitalOcean traded at 67x forward earnings at Monday’s close, above its 5-year average of 46x:
But that average comes from years of much slower growth: revenue grew 15% in 2025.
The risk is the spending. Capital spending climbs steeply into 2027 as DigitalOcean adds data center capacity, and it ended 2025 with $1.70 billion of debt against $0.25 billion of cash.
Still, growth is speeding up, and the Street’s average target of $174 is nearly double Monday’s close. For anyone who can stomach the swings, the drop looks like a chance to buy.
Of course, investors will want to see how DigitalOcean pays for the capacity behind that 60% growth, which is exactly what they punished CoreWeave over.
So what is DigitalOcean stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
