DigitalOcean: AI Acceleration Creates A Durable Rally To Bank On

Gary Alexander33.38K FollowersFollow5ShareSavePlay(12min)Comment(1)SummaryDigitalOcean stands out in 2026 as a rare tech name with strong momentum, benefiting from AI-native customers expanding infrastructure usage.DOCN’s ARR is accelerating, driven by large AI-native clients, and the company maintains EBITDA margins above 40%, despite ramping server capacity.FY26 guidance calls for 19%-22% revenue growth, with EBITDA margins compressing to 37% as investments in capacity continue, but nominal EBITDA still grows 8%.At 5.9x EV/FY26 revenue, DOCN is not a deep bargain, yet accelerating growth and AI tailwinds justify reiterating a buy rating post-earnings. EvgeniyShkolenko/iStock via Getty Images So far in 2026, it's incredibly difficult to find tech companies that have positive sentiment and momentum underneath them. Investors have particularly shunned software stocks, as there is a widespread perception that the increasing capabilities of agentic AIThis article was written byGary Alexander33.38K FollowersFollowWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.Analyst’s Disclosure: I/we have a beneficial long position in the shares of DOCN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.