DigitalOcean Stock Soars: The Cloud Giant Defying Market Gravity in 2025

Wall Street's latest love affair? A cloud stock that's leaving skeptics in the dust.

DigitalOcean's rocket-fueled rally has analysts scrambling—and short sellers sweating. The infrastructure-as-a-service player just turned 'boring cloud hosting' into this quarter's must-own asset.

Why the Street Can't Look Away

Institutional money's flooding in as DO crushes earnings expectations. The numbers don't lie—revenue growth that outpaces legacy players, margins expanding despite inflation, and that sweet, sweet developer loyalty.

The Bear Trap

Short interest got demolished when DO's AI infrastructure bets started paying off. Turns out, not every tech play needs to be an LLM factory to win in this market—sometimes you just need to be the shovel seller in the AI gold rush.

The Bottom Line

While FAANG stocks wobble, DigitalOcean's writing its own rulebook. Just don't mention that time three hedge funds called it 'a niche player' at $40/share. (It's now trading at... considerably more.)

DigitalOcean's outstanding Q2

DigitalOcean offers a "simplified, scalable, and approachable" cloud computing platform to its digitally native enterprise (DNE) customers.

The simplicity of its cloud platform and artificial intelligence (AI) solutions sets them in stark contrast to the complex offerings provided by its hyperscale cloud computing peers.

Image source: Getty Images.

By focusing on smaller DNEs with its streamlined cloud computing solutions, DigitalOcean has carved out a leadership position in its niche of the cloud market.

However, the company's Q2 results show that DigitalOcean's solutions are becoming more popular among its larger customers.

Its largest customer cohort, Scalers+ (those spending over $100,000 annually), grew revenue by 35% during the quarter.

Helping to lead this growth charge, 64 of its 100 largest customers added a new offering from the company over the last year, and 26 of its largest 100 did so in Q2 alone.

These are excellent signs that suggest larger DNEs see the value provided by DigitalOcean and are not immediately defecting to the hyperscalers as they grow.

This promising development, paired with DigitalOcean's AI and machine learning sales more than doubling in Q2, makes the company an intriguing investment at 16 times next year's earnings.