DigitalOcean (DOCN): Assessing Whether Recent Share Price Momentum Still Leaves the Stock Undervalued

DigitalOcean Holdings (DOCN) has quietly put together a strong run, with shares up roughly 27% over the past 3 months and more than 37% over the past year, outpacing many mid cap software peers.

See our latest analysis for DigitalOcean Holdings.

Trading around $48.97, DigitalOcean’s recent 90 day share price return has been the real story, helping drive a 1 year total shareholder return above 37 percent and signaling that momentum is still building rather than fading.

If this kind of cloud name has your attention, it is worth also scanning other high growth tech and AI opportunities through high growth tech and AI stocks to see what else fits your watchlist.

With shares now hovering just below analyst targets and trading at a modest intrinsic discount, the key question for investors is whether DigitalOcean remains undervalued or if the market is already pricing in its next leg of growth.

Most Popular Narrative Narrative: 8.2% Undervalued

With shares at $48.97 against a narrative fair value near $53.33, the story frames DigitalOcean as modestly mispriced and still offering upside.

Analysts have nudged their price target for DigitalOcean Holdings slightly higher to approximately $53.33 per share from roughly $53.33 per share, citing marginal improvements in the company’s discount rate assumptions and stable expectations for revenue growth, profit margins, and future valuation multiples.

Read the complete narrative.

Curious how steady revenue expansion, resilient margins, and a rich future earnings multiple can still justify more upside from here? Unlock the full playbook behind this valuation.

Result: Fair Value of $53.33 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying hyperscaler competition and heavy AI infrastructure investment needs could pressure margins, challenge differentiation, and derail the expected upside in this narrative.

Find out about the key risks to this DigitalOcean Holdings narrative.

Build Your Own DigitalOcean Holdings Narrative

If you see the story differently or want to dig into the numbers yourself, you can quickly build a custom view in under three minutes: Do it your way.

A great starting point for your DigitalOcean Holdings research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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