Why Digital Ocean is the Most Undervalued Play in Cloud Infrastructure

Digital Ocean represents one of the most undervalued opportunities in the AI cloud infrastructure space. It’s trading under $30 per share with under $3 billion market cap, the company trades under 4x revenue while comparable but larger CoreWeave trades around 20x revenue.

Digital Ocean generated $781 million in revenue during 2024 with healthy 13% growth and impressive 42% EBITDA margins, delivering $84 million in net income. Meanwhile, CoreWeave remains cash-flow negative while burning through capital for infrastructure expansion.

Digital Ocean's AI transformation is accelerating rapidly, with AI annual recurring revenue growing over 160% year-over-year. The company has strategically positioned itself in the developer-focused segment with simplified GPU offerings and a comprehensive GenAI platform launched in early 2025. This developer-first approach serves 600,000+ customers across a diversified base, contrasting sharply with CoreWeave's dependence on large enterprise contracts that create concentration risk.

Digital Ocean’s stock price should easily double or more. If Digital Ocean achieved just half of CoreWeave's revenue multiple at 9x, the stock would trade around $56, representing 100% upside. A more appropriate AI cloud valuation of 12x revenue would drive the stock to $84, delivering 200% returns. Did I mention, Digital Ocean is actually profitable….

Never worked for DOCN and don’t know anyone that ever has, just a customer for several years that likes to investment in the products I use and know, especially when they are so undervalued.