DigitalOcean's (DOCN) Expanding Portfolio Strengthens Prospect
DigitalOcean‘s DOCN shares have returned 56.8% in the past three months compared with the Zacks Computer & Technology sector’s increase of 18.2% over the same time frame. The uptick can be attributed to DOCN’s expanding portfolio and strong partner base in its cloud computing sector.
DOCN's success is highlighted by the completion of the training for 4,000 builders and scalers on its platform in the third quarter, contributing to a total customer base of more than 154,000. Notably, customers spending over $50 per month contributes 86% of overall revenue.
A noteworthy move that contributed to DigitalOcean's positive momentum was the acquisition of Paperspace, a company specializing in AI/ML capabilities. This acquisition expanded DigitalOcean's market opportunities.
Building on this success, DOCN recently expanded its portfolio with NVIDIA NVDA, further solidifying its commitment to providing innovative infrastructure for startups and growing digital businesses.
DigitalOcean Holdings, Inc. Price and Consensus
DigitalOcean Holdings, Inc. price-consensus-chart | DigitalOcean Holdings, Inc. Quote
The recent virtualized availability of NVIDIA H100 Tensor Core GPUs on its Paperspace platform reflects the increasing demand for accelerated AI computing, with NVIDIA H100 GPUs offering exceptional performance to reduce training iteration periods and enhance model inference response times.
DigitalOcean's commitment to simplifying cloud computing and providing cost-effective solutions is evident, as it not only offers access to powerful GPUs on demand but also introduces improvements to the underlying network infrastructure and deployment processes.
The integration of NVIDIA H100 GPUs, coupled with enhanced features like a redesigned container registry and fortified deployment endpoints, positions DigitalOcean as a crucial player in providing innovative infrastructure to develop the next generation of AI/ML applications.
DOCN’s Expanding Portfolio Aids Prospect
The latest move by DigitalOcean in integrating NVIDIA H100 Tensor Core GPUs on its Paperspace platform is in sync with the growing demand for accelerated AI computing, offering startups a powerful and cost-effective solution for advanced AI/ML development.
During the third quarter, DOCN further highlighted the addition of Nomic, a company founded in 2022 focusing on AI explainability, to the Paperspace platform, with Nomic selecting DigitalOcean for High Performance Compute, intuitive software and reliable customer support.
In November, DigitalOcean announced that 78% of organizations plan to increase AI/ML usage, 37% will boost cybersecurity spending, and 35% adopt multi-cloud strategies, emphasizing diversification in cloud infrastructure among SMBs and startups.
DigitalOcean continued to expand its offerings with the launch of Scalable Storage for PostgreSQL and MySQL Managed Databases. This innovative solution allows SMBs to incrementally add affordable disk storage without altering compute resources, ensuring flexible scaling and optimized costs for the database needs.
DOCN’s strong portfolio and expanding partner base are expected to boost top-line growth in the cloud computing landscape.
For fourth-quarter 2023, DOCN expects revenues of $178 million. The Zacks Consensus Estimate for revenues is pegged at $178.25 million, indicating year-over-year growth of 9.36%.
Non-GAAP earnings for the fourth quarter of 2023 are expected in the range of 36-37 cents per share. The consensus mark for earnings is pegged at 37 cents per share, moving up by a penny in the past 30 days.
For 2023, DOCN expects revenues of 690 million. The Zacks Consensus Estimate for 2023 revenues is pegged at $689.92 million, indicating 19.71% growth year over year.
Zacks Rank & Stocks to Consider
Currently, DOCN carries a Zacks Rank #4 (Sell).
Blackline BL and Itron ITRI are some better-ranked stocks that investors can consider from the broader sector, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BL and ITRI shares have returned 8.7% and 1.9%, respectively, in the past six months.
Long-term earnings growth rates for Blackline and Itron are 50.56% and 23%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Itron, Inc. (ITRI) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
BlackLine (BL) : Free Stock Analysis Report
DigitalOcean Holdings, Inc. (DOCN) : Free Stock Analysis Report
