QM · rank #5 · 2026-10-20
DOCN
NYSE · $11.60B (USD)
The exact numbers the algorithm saw.
| Momentum 12-1 Return from 12 months ago to 1 month ago. | +255.87% |
|---|---|
| ROE TTM Return on equity, trailing 12 months. | +62.3% |
| Profit margin Net profit margin, trailing 12 months. | +23.3% |
| Market cap (USD) Size filter: > $500M required. | $11.60B |
| Anchor (recent) Close on 2026-09-18 | $130.14 |
| Anchor (far) Close on 2025-09-19 | $36.57 |
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-focused cloud platform that has pivoted aggressively into AI-native infrastructure, offering managed inference, agent orchestration, and GPU/CPU compute to over 680,000 customers.
Rationale
The quality_momentum signal is reinforced by 29% YoY revenue growth accelerating toward a guided 35% Q4 exit rate, 212% YoY AI ARR growth, a 40% adjusted EBITDA margin, and a 62% TTM ROE — all consistent with a high-quality compounder gaining operating leverage on a real demand inflection.
Material risks
- 1Hyperscalers internalizing inference and agent orchestration is a credible commoditization path — DOCN's moat rests on simplicity and pricing, not proprietary technology, making its 85% inference/core-cloud AI ARR mix vulnerable if AWS/GCP close the ease-of-use gap for developer workloads.
- 2The balance sheet carries ~$921 million in combined debt and finance-lease obligations against $767 million cash, meaning capacity expansion financed through equipment obligations could compress free-cash-flow conversion materially if AI utilization or long-term commitment renewal rates disappoint.
AI verdict council
Each pick is reviewed independently by 3 models before any order. 3 of 3 voted to proceed.