QM · rank #5 · 2026-07-24
DOCN
NYSE · $15.95B (USD)
The exact numbers the algorithm saw.
| Momentum 12-1 Return from 12 months ago to 1 month ago. | +429.17% |
|---|---|
| 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 2026-06-24 | $148.59 |
| Anchor (far) Close on 2025-06-24 | $28.08 |
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 ARR approaching $1 billion and accelerating AI customer cohorts driving a reacceleration to 22% revenue growth in Q1 2026.
Rationale
The quality_momentum signal is reinforced by a genuine fundamental inflection — 221% AI ARR growth, 70% ROE, ~25% profit margins, and a raised multi-year outlook together confirm that momentum is earnings-driven rather than purely sentiment-driven.
Material risks
- 1The ~$800 million follow-on equity raise introduces meaningful dilution and capital deployment execution risk; if AI infrastructure buildout yields sub-par returns or misses the $1.3 billion 2028 revenue target, the quality leg of the thesis collapses alongside the momentum.
- 2Hyperscale competitors (AWS, Azure, GCP) are actively targeting SMB inference workloads with simplified tooling, and DOCN lacks a patent moat or sole-source position to defend margin if pricing pressure intensifies at the inference layer.
AI verdict council
Each pick is reviewed independently by 3 models before any order. 2 of 3 voted to proceed.