We are experiencing some temporary issues. The market data on this page is currently delayed. Please bear with us as we address this and restore your personalized lists.
Is DigitalOcean Holdings, Inc. (DOCN) the Best Cloud Computing Stock to Buy According to Analysts?
We recently compiled a list of the 12 Best Cloud Computing Stocks to Buy According to Analysts.In this article, we are going to take a look at where DigitalOcean Holdings, Inc. (NYSE:DOCN) stands against the other cloud computing stocks.
Cloud computing enables companies to store their infrastructures remotely using the Internet, ultimately reducing costs and creating value. As per Gartner, worldwide end-user spending on public cloud services is expected to reach $723.4 billion in 2025, reflecting a rise from $595.7 billion in 2024. The use of Al technologies in IT and business operations continues to accelerate the role of cloud computing in helping operations and outcomes. The cloud use cases have been expanding with an increased focus on distributed, hybrid, cloud-native, and multi-cloud environments, aided by a cross-cloud framework, which should make the public cloud services market achieve a growth rate of 21.5% in 2025.
Gartner believes that 90% of organizations will adopt a hybrid cloud approach through 2027. Resultantly, all segments of the cloud market should see a double-digit growth rate in 2025 demonstrating how I&O (Infrastructure and Operations) leaders remain focused on effectively integrating I&O into their GenAl strategies and laying the groundwork for running Al and GenAl infrastructure at the edge.
Moving forward, the concept of cloud computing is expected to change because of technological enhancements and dynamic business requirements. As per Nasscom Community, quantum computing integration, AI-driven cloud services and multi-cloud, and interoperability are some of the future trends in cloud computing. The emerging field of quantum computing focuses on changing how data processing is done because it can handle even the most complicated computations that some other conventional systems cannot solve. Over the next 5 years, more cloud services are expected to offer its clients quantum computing capabilities, which should in turn help in cryptography, drug development, material science, and optimization.
AI and ML are some of the leading technologies behind innovation in the cloud. Nasscom Community believes that pervasive AI is expected to be in each layer of the cloud system, right from the server level to the customer service level by 2025. Moving forward, AI algorithms should help in predictive analysis and, therefore, prevent problems that can arise with infrastructure, control workload, and reduce automation of tedious tasks.
Future developments in the cloud computing field are expected to enhance the multi-cloud strategies involving using more than one cloud service provider between the business and the cloud altogether. Notably, distributing workloads among several cloud providers would help enterprises maximize cost and performance. The businesses have been dividing their workload across multiple cloud service providers in a bid to control data and resources and use the strength of each cloud service provider.
Our Methodology
To list the 12 Best Cloud Computing Stocks to Buy According to Analysts, we conducted extensive research and sifted through several online rankings. After getting the initial list of 18 stocks, we chose the ones that were popular among hedge funds and that analysts saw the most upside to. Next, the stocks were arranged in ascending order of their average upside potential, as of 10th January. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close up view of a laptop computer, the cloud computing platform displayed on the screen.
DigitalOcean Holdings, Inc. (NYSE:DOCN) operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s growth trajectory is expected to be aided by its strong portfolio of innovative solutions and an expanding partner base that has been fueling adoption across high-growth sectors such as AI/ML, cybersecurity, and data analytics. DigitalOcean Holdings, Inc. (NYSE:DOCN)’s strong portfolio should continue to aid its top-line growth.
With innovations including larger droplet configurations, GPU-accelerated infrastructure, and enhanced backup options, DigitalOcean Holdings, Inc. (NYSE:DOCN) remains focused on catering to large-scale and high-performance workloads. DigitalOcean Holdings, Inc. (NYSE:DOCN)’s expanding partner base comprises industry leaders such as NVIDIA, Netlify, Hugging Face, and MongoDB.
With the help of its alliance with NVIDIA, DigitalOcean Holdings, Inc. (NYSE:DOCN) provides GPU droplets accelerated by NVIDIA H100 Tensor Core GPUs and integrates NVIDIA’s Tensor Core GPU worker nodes into its Kubernetes platform. This simplifies deployment with advanced NVIDIA tools. Furthermore, this partnership streamlined the entire setup process for GPU resources. Now, developers can deploy GPU Droplets easily, reducing the complexity of configuring security and networking.
Overall DOCN ranks 7th on our list of the best cloud computing stocks to buy according to analysts. While we acknowledge the potential of DOCN as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than DOCN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
