QM · rank #4 · 2026-07-23
DOCN
NYSE · $15.95B (USD)
The exact numbers the algorithm saw.
| Momentum 12-1 Return from 12 months ago to 1 month ago. | +463.57% |
|---|---|
| ROE TTM Return on equity, trailing 12 months. | +70.0% |
| Profit margin Net profit margin, trailing 12 months. | +25.0% |
| Market cap (USD) Size filter: > $500M required. | $15.95B |
| Anchor (recent) Close on 2026-06-23 | $157.18 |
| Anchor (far) Close on 2025-06-23 | $27.89 |
The AI research card
Independent qualitative review of each pick before the order is placed. On the rare day the research service is unavailable, the paper book trades on the quant ranking alone and no card appears here.
Summary
DigitalOcean is a developer-oriented, AI-native cloud infrastructure platform targeting SMBs and startups, with ~$1B ARR and accelerating AI customer cohorts driving a reacceleration to 22% YoY revenue growth in Q1 2026.
Rationale
The quality_momentum signal is reinforced by a genuine fundamental inflection — AI customer ARR up 221% YoY and million-dollar customer ARR up 179% YoY underpin the momentum score, while 41% adjusted EBITDA margins and 70% ROE validate the quality screen.
Material risks
- 1The ~$800M follow-on equity raise introduces meaningful dilution and capital deployment execution risk — if AI infrastructure buildout yields sub-par returns or misses the $1.3B 2028 revenue target, the quality leg of the thesis degrades materially.
- 2Hyperscale providers (AWS, Azure, GCP) can replicate DOCN's inference and agentic workload offerings at scale with superior pricing power, threatening the SMB/startup cohort that drives the high-ARR customer growth underpinning momentum.
AI verdict council
Each pick is reviewed independently by 3 models before any order. 2 of 3 voted to proceed.