Upside case
Bull case
$134-22.8%
The bull case prices DOCN at 112x on FY1 earnings, assuming continued execution and no meaningful deceleration in the core business.
Analysis OverviewBuyUpdated Jun 18, 2026
DigitalOcean Holdings, Inc. (DOCN) Stock Analysis
Wall Street verdict, consensus price target, and analyst rating breakdown — everything needed to frame the risk/reward at today's price.
Analyst consensus
Buy
Covering
19
analysts
12 bullish · 0 bearish · 19 covering DOCN
Strong Buy
0
Buy
12
Hold
7
Sell
0
Strong Sell
0
Consensus Target
$149
-13.9% vs today
Scenario Range
$64 – $134
Model bear to bull value window
Coverage
19
Published analyst ratings
Valuation Context
144.9x
Forward P/E · Market cap $18.1B
DOCN price targets
Three scenarios for where DOCN stock could go
Current
~$173
Confidence
65 / 100
Updated
Jun 18, 2026
Where we are now
Current · $173
Bear
$64
Base
$101
Bull
$134
Market caseClosest to today
Base case
$101-41.4%
At 85x on FY1 earnings, the base case reflects a reasonable but not stretched valuation. It prices in continued growth without assuming an exceptional setup.
Stress case
Bear case
$64-63.1%
If investor confidence fades or macro conditions deteriorate, a 91x multiple contraction could push DOCN down roughly 63% from where it trades now.
Not financial advice. Model confidence reflects internal scenario assumptions, not a guarantee of returns. Past performance does not predict future results.
DigitalOcean Holdings, Inc.
DOCN · NYSETechnologySoftware - InfrastructureDecember year-end
DigitalOcean is a cloud computing platform that provides infrastructure and developer tools primarily for startups, small businesses, and individual developers. It generates revenue through subscription-based cloud services — including compute instances, storage, databases, and networking — with infrastructure-as-a-service accounting for the majority of its income. The company's competitive advantage lies in its developer-friendly simplicity and transparent pricing, which appeals to smaller customers who find larger cloud providers overly complex.
Market Cap
$18.1B
Revenue TTM
$949M
Net Income TTM
$254M
Net Margin
26.8%
DOCN Revenue and Earnings Performance
Quarterly beat-or-miss track record against analyst estimates, plus forward revenue and EPS outlook for the next two fiscal years.
EPS Beat Rate
100%Exceptional
12 quarters tracked
Revenue Beat Rate
50%Exceptional
vs consensus estimates
Avg EPS Surprise
+24.6%
above Street consensus
Beat / Miss Record
BeatMissLeft = EPS · Right = Revenue
Q3 2025
Q4 2025
Q1 2026
Q2 2026
Last 4 Quarters
EPS beats: 4 of 4Q3 2025
EPS
$0.59/$0.47
Revenue
$219M/$226M
Q4 2025
EPS
$0.33/$0.31
Revenue
$230M/$238M
Q1 2026
EPS
$0.44/$0.38
Revenue
$242M/$238M
Q2 2026
EPS
$0.44/$0.27
Revenue
$258M/$250M
| Quarter | EPS (Actual / Est) | EPS Surprise | Revenue (Actual / Est) | Rev Surprise |
|---|---|---|---|---|
| Q3 2025 | $0.59/$0.47 | +25.5% | $219M/$226M | -3.4% |
| Q4 2025 | $0.33/$0.31 | +6.5% | $230M/$238M | -3.4% |
| Q1 2026 | $0.44/$0.38 | +15.8% | $242M/$238M | +2.0% |
| Q2 2026 | $0.44/$0.27 | +65.5% | $258M/$250M | +3.3% |
FY1–FY2 Estimates
Revenue Outlook
FY1
$1.1B
+18.6% YoY
FY2
$1.4B
+22.4% YoY
EPS Outlook
FY1
$2.08
-8.2% YoY
FY2
$2.26
+8.2% YoY
Trailing FCF (TTM)$38M
FCF Margin: 4.0%
Next Earnings
August 4, 2026
Expected EPS
$0.26
Expected Revenue
$274M
DOCN beat EPS estimates in 4 of 4 tracked quarters. A perfect track record raises the bar for the upcoming report.
DOCN Valuation Snapshot
Current multiples compared to the S&P 500, the company's sector, and its own five-year average.
Relative Value Signal
Expensive versus peers
Fair value est. $91 — implies -47.4% from today's price.
Premium to Fair Value
47.4%
above fair value
Deep DiscountFair ValueVery Expensive
vs S&P 500 Trailing P/E
DOCN
68.8x
vs
S&P 500
24.4x
+181% premium
vs Technology Trailing P/E
DOCN
68.8x
vs
Technology
29.0x
+137% premium
vs DOCN 5Y Avg P/E
Today
68.8x
vs
5Y Average
80.3x
14% discount
Forward PE
144.9x
S&P 500
18.8x
+671%
Technology
22.3x
+551%
5Y Avg
—
—
Trailing PE
68.8x
S&P 500
24.4x
+181%
Technology
29.0x
+137%
5Y Avg
80.3x
-14%
PEG Ratio
—
S&P 500
1.66x
—
Technology
1.51x
—
5Y Avg
—
—
EV/EBITDA
63.0x
S&P 500
15.2x
+314%
Technology
16.6x
+279%
5Y Avg
32.4x
+94%
Price/FCF
106.5x
S&P 500
20.7x
+415%
Technology
19.2x
+455%
5Y Avg
32.4x
+228%
Price/Sales
20.1x
S&P 500
3.1x
+549%
Technology
2.4x
+723%
5Y Avg
7.9x
+155%
Dividend Yield
—
S&P 500
1.91%
—
Technology
1.11%
—
5Y Avg
—
—
| Metric | DOCN | S&P 500 | Technology | 5Y Avg DOCN |
|---|---|---|---|---|
| Forward PE | 144.9x | 18.8x+671% | 22.3x+551% | — |
| Trailing PE | 68.8x | 24.4x+181% | 29.0x+137% | 80.3x-14% |
| PEG Ratio | — | 1.66x | 1.51x | — |
| EV/EBITDA | 63.0x | 15.2x+314% | 16.6x+279% | 32.4x+94% |
| Price/FCF | 106.5x | 20.7x+415% | 19.2x+455% | 32.4x+228% |
| Price/Sales | 20.1x | 3.1x+549% | 2.4x+723% | 7.9x+155% |
| Dividend Yield | — | 1.91% | 1.11% | — |
DOCN trades above S&P 500 benchmarks on 5 of 5 measured multiples — commands a broad premium across most valuation dimensions.
Forward P/E and PEG reflect analyst consensus estimates. Historical averages use trailing ratios where forward data is unavailable.S&P 500 and sector benchmarks both use trailing median P/E — similar readings indicate the broader index and sector are priced alike.
Open valuation toolDOCN Financial Health
Verdict
Adequate
DOCN 15.6% ROIC signals a durable competitive advantage.
Cash Engine
Revenue, margins, and cash generation
Revenue (TTM)
Trailing-twelve-month sales base
$949M
Revenue Growth
TTM vs prior year
+17.6%
Gross Margin
Gross profit as a share of revenue
58.5%
Operating Margin
Operating income divided by revenue
16.4%
Net Margin
Net income divided by revenue
26.8%
EPS (TTM)
Diluted earnings per share, trailing twelve months
$2.27
Free Cash Flow (TTM)
Cash generation after capex
$38M
FCF Margin
FCF as share of revenue — the primary cash quality signal
4.0%
Capital Quality
ROIC, leverage, and debt serviceability
ROIC
Return on invested capital — primary competitive quality signal
15.6%
ROA
Return on assets, trailing twelve months
13.0%
Cash & Equivalents
Liquid assets on the balance sheet
$254M
Net Debt
Total debt minus cash
$476M
Debt Serviceability
Net debt as a multiple of annual free cash flow
12.6× FCF
~12.6 years to full repayment at current FCF run-rate
ROE *
Return on equity, trailing twelve months
165.7%
* Elevated by buyback-compressed equity — compare ROIC (15.6%) for an undistorted picture of capital efficiency.
Shareholder Returns
How capital is returned to owners
Total shareholder yield
0.5%
Dividend
—
Buyback
0.5%
Share Repurchases
Trailing buyback outflow — dollar magnitude of capital returned
$82M
Dividend / Share
Annualized trailing dividend per share
—
Payout Ratio
Share of earnings distributed as dividends
—
Shares Outstanding
Declining as buybacks retire shares
104M
All figures from the trailing twelve months. ROIC uses invested capital (equity + net debt). ROE marked * where buyback-compressed equity base may inflate the figure.
Open full ratios pageDOCN Stock Risk Factors
Key factors that could pressure the stock price, compress the multiple, or weigh on future results.
AI analysis · updated June 18, 2026
High Risk
Competition in AI Cloud
DigitalOcean faces intense competition in the AI cloud space, which could pressure margins and market share despite its recent AI-Native Cloud launch.
High Risk
Revenue Concentration
With over 650,000 customers, reliance on a broad but potentially fragmented user base may expose revenue volatility if high-value accounts churn.
Medium
Operational Scaling Risks
Expanding to 20 data centers across 5 regions introduces execution risks, including capacity management and cost overruns.
Medium
Stock Volatility
Recent earnings beat and AI-driven growth expectations have led to significant stock price swings, reflecting investor uncertainty.
Medium
Regulatory Compliance
Operating globally requires adherence to diverse data privacy laws (e.g., Cookie Policies, Terms of Service), increasing compliance costs and legal risks.
Lower
Customer Retention
Strong retention metrics and predictable cash flow mitigate churn risks, but reliance on developers leaves exposure to niche market shifts.
High Risk
Financial Risks
Disclosure of 58 risk factors, particularly in Finance & Corporate, highlights potential liquidity or debt-related vulnerabilities.
Medium
Valuation Uncertainty
Analyst price targets vary widely ($177 to $288), reflecting divergent views on AI-driven growth sustainability.
These are risk mechanisms, not predictions. The key question is which would force a cut to earnings estimates or a lower multiple than the market currently prices in.
Why DOCN Stock Could Outperform
Structural drivers behind the upside case and why the stock could outperform over the next 12 months.
AI analysis · updated June 18, 2026
AI platform leadership
DigitalOcean is recognized as a key platform for AI workloads, from real-time agents to large-scale inference tasks.
Developer-first cloud strategy
The company's focus on developers and its upmarket expansion drive growth and customer loyalty.
Strong customer base
With over 650,000 customers and millions of developers, DigitalOcean has a broad and trusted user base.
Global infrastructure reach
DigitalOcean operates a distributed cloud platform across North America, Europe, and Asia, supporting international scalability.
Cash-generative operations
The company's stable and profitable operations provide a solid foundation for continued investment and growth.
Stock performance momentum
DOCN's stock has shown significant appreciation, reflecting strong investor confidence in its growth trajectory.
A real bull case compounds — each driver matters most when it strengthens margins, supports capital returns, and keeps the company above the market's minimum growth bar simultaneously.
DOCN Stock Price Performance
52-week range context and price returns across multiple time horizons. Dividend contribution is shown separately in the Capital Return section.
Current Price
$173.27
52W Range Position
91%
52-Week Range
Current price plotted between the 52-week low and high.
52-Week Low
$25.56
+577.9% from the low
52-Week High
$187.50
-7.6% from the high
1 Month
+17.53%
3 Month
+110.08%
YTD
+253.8%
1 Year
+523.0%
3Y CAGR
+59.2%
5Y CAGR
+29.8%
10Y CAGR
+15.1%
Range context matters because valuation compression and earnings misses rarely hit from the same starting point. A stock already far below its high can still fall, but it is no longer carrying the same embedded optimism as one pressing a fresh peak.
DOCN vs Peers
Valuation, growth, and margin comparison against the closest publicly traded peers for this company.
Peer Set
Accurate peer set
Forward PE
144.9x
vs 28.6x median
+408% above peer median
Revenue Growth
+18.6%
vs +11.4% median
+63% above peer median
Net Margin
26.8%
vs 2.0% median
+1266% above peer median
| Company | Mkt Cap | Fwd PE | Rev Grw | Margin | Rating | Upside |
|---|---|---|---|---|---|---|
DOC DOCN DigitalOcean Holdings, Inc. | $18.1B | 144.9x | +18.6% | 26.8% | Buy | -13.9% |
FSL FSLY Fastly, Inc. | $2.8B | 55.0x | +16.0% | -15.8% | Hold | +30.9% |
NET NET Cloudflare, Inc. | $79.2B | 187.1x | +19.5% | -3.7% | Buy | +2.2% |
AKA AKAM Akamai Technologies, Inc. | $18.2B | 18.6x | +11.2% | 10.2% | Hold | +26.7% |
BAN BAND Bandwidth Inc. | $1.6B | 28.6x | +11.1% | 2.0% | Buy | +16.8% |
AMZ AMZN Amazon.com, Inc. | $2.63T | 27.8x | +11.4% | 12.2% | Buy | +25.9% |
This peer comparison reflects companies with similar business models, product lines, or market positioning, supplemented by industry grouping when direct matches are limited.
DOCN Dividend and Capital Return
DOCN returns 0.5% annually — null% through dividends and 0.5% through buybacks.
Dividend UnknownFCF Unknown
Total Shareholder Yield
0.5%
Dividend + buyback return per year
Buyback Yield
0.5%
Dividend Yield
—
Payout Ratio
—
Dividend Profile
Yield, cadence, and growth quality
Dividend / Share
Trailing annualized cash dividend
$0.00
Growth Streak
Consecutive years of dividend increases
0Y
3Y Div CAGR
—
5Y Div CAGR
—
Ex-Dividend Date
—
Payment Cadence
—
0 payments over the last 12 months
Buyback Engine
How much per-share support comes from repurchases
Repurchases (TTM)
Cash used for buybacks in the latest trailing period
$82M
Estimated Shares Retired
474.0K
Approx. Share Reduction
0.5%
Shares Outstanding
Current diluted share count from the screening snapshot
104M
FAQ
7 questionsDOCN Investor Questions
Common questions answered from live analyst data and company financials.
01Is DigitalOcean Holdings, Inc. (DOCN) stock a buy or sell in 2026?
DigitalOcean Holdings, Inc. (DOCN) is rated Buy by Wall Street analysts as of 2026. Of 19 analysts covering the stock, 12 rate it Buy or Strong Buy, 7 rate it Hold, and 0 rate it Sell or Strong Sell. The consensus 12-month price target is $149, implying -13.9% from the current price of $173. The bear case scenario is $64 and the bull case is $134.
02What is the DOCN stock price target for 2026?
The Wall Street consensus price target for DOCN is $149 based on 19 analyst estimates. The high-end target is $200 (+15.4% from today), and the low-end target is $57 (-67.1%). The base case model target is $101.
03Is DigitalOcean Holdings, Inc. (DOCN) stock overvalued in 2026?
DOCN trades at 144.9x times forward earnings. The stock trades at a notable premium to the broad market, which is typical for businesses with strong free cash flow and above-average growth expectations. Based on current multiples versus the peer group, the relative model signals expensive versus peers. Whether the stock is over or undervalued ultimately depends on whether consensus earnings estimates are achievable.
04What are the main risks for DigitalOcean Holdings, Inc. (DOCN) stock in 2026?
The primary risks for DOCN in 2026 are: (1) Competition in AI Cloud — DigitalOcean faces intense competition in the AI cloud space, which could pressure margins and market share despite its recent AI-Native Cloud launch. (2) Revenue Concentration — With over 650,000 customers, reliance on a broad but potentially fragmented user base may expose revenue volatility if high-value accounts churn. (3) Financial Risks — Disclosure of 58 risk factors, particularly in Finance & Corporate, highlights potential liquidity or debt-related vulnerabilities. Each factor has the potential to pressure earnings or compress the stock's valuation multiple.
05What is DigitalOcean Holdings, Inc.'s revenue and earnings forecast?
Analyst consensus estimates DOCN will report consensus revenue of $1.1B (+18.6% year-over-year) and EPS of $2.08 (-8.2% year-over-year) for the upcoming fiscal year. The following year, analysts project $1.4B in revenue.
06When does DigitalOcean Holdings, Inc. (DOCN) report its next earnings?
DigitalOcean Holdings, Inc. is expected to report its next earnings on approximately 2026-08-04. Consensus expects EPS of $0.26 and revenue of $274M. Over recent quarters, DOCN has beaten EPS estimates 100% of the time.
07How much free cash flow does DigitalOcean Holdings, Inc. generate?
DigitalOcean Holdings, Inc. (DOCN) generated $38M in free cash flow over the trailing twelve months — a free cash flow margin of 4.0%. DOCN returns capital to shareholders through and share repurchases ($82M TTM).