DigitalOcean (NYSE:DOCN) Stock Price Down 7.3% – What’s Next?

DigitalOcean Holdings, Inc. (NYSE:DOCN) shares traded down 7.3% on Monday . The stock traded as low as $60.19 and last traded at $59.0160. 562,162 shares were traded during trading, a decline of 81% from the average session volume of 2,914,188 shares. The stock had previously closed at $63.63.

Key Stories Impacting DigitalOcean

Here are the key news stories impacting DigitalOcean this week:

• Positive Sentiment: Q4 beat and AI traction — DOCN topped revenue and EPS estimates; management reported AI-specific ARR of ~$120M (150% YoY) and signs of up‑market customer expansion and low churn, which supports a re-rating for the business model. DigitalOcean’s AI Surge: The Cloud Underdog Swims Upstream
• Positive Sentiment: Broad analyst optimism — Multiple firms raised price targets (examples: BofA to $86, Oppenheimer to $85, Goldman to $78, Cantor Fitzgerald/Citizens/JMP/Citizens lifts), signaling buy-side conviction that DOCN’s AI/inference positioning supports materially higher valuation. Analyst Price Target Coverage
• Neutral Sentiment: Strategic moves to secure capacity — DigitalOcean expanded its AMD Instinct GPU footprint to improve price‑performance and supply resilience vs. NVIDIA dependency; this supports longer‑term inference capacity but requires capital deployment. DigitalOcean Expands AMD AI Cloud
• Neutral Sentiment: High-margin profile but increased investment — The company reported strong adjusted EBITDA margins (~42% in 2025) and positive GAAP net income, yet plans to intentionally lower free-cash-flow margins (guidance ~15–17% in 2026) as it invests in capacity. DOCN Company Coverage
• Negative Sentiment: Guidance disappointed on EPS — Q1 and FY2026 EPS guidance was well below Street consensus (Q1 EPS guide ~0.22–0.27 vs. ~0.39 consensus; FY26 guide 0.75–1.00 vs. ~1.68 consensus), creating near-term uncertainty around profitability per share and contributing to profit‑taking. DigitalOcean Q4 2025 Financial Results (Press Release / Slides)

Analyst Ratings Changes

Several brokerages have recently commented on DOCN. Weiss Ratings reaffirmed a “hold (c+)” rating on shares of DigitalOcean in a report on Monday, December 29th. Barclays upped their price objective on shares of DigitalOcean from $63.00 to $69.00 and gave the company an “overweight” rating in a research note on Wednesday. Wall Street Zen cut shares of DigitalOcean from a “buy” rating to a “hold” rating in a report on Sunday, January 4th. Oppenheimer boosted their price target on shares of DigitalOcean from $60.00 to $85.00 and gave the company an “outperform” rating in a report on Wednesday. Finally, Bank of America raised their price objective on shares of DigitalOcean from $72.00 to $86.00 and gave the stock a “buy” rating in a research note on Wednesday. Nine analysts have rated the stock with a Buy rating and six have assigned a Hold rating to the company’s stock. According to data from MarketBeat.com, the company has a consensus rating of “Moderate Buy” and an average target price of $67.50.

DigitalOcean Stock Down 5.5%

The firm has a market capitalization of $5.43 billion, a PE ratio of 23.92, a price-to-earnings-growth ratio of 8.32 and a beta of 1.76. The business’s 50-day moving average price is $55.78 and its 200-day moving average price is $45.13.

Institutional Investors Weigh In On DigitalOcean

Hedge funds and other institutional investors have recently made changes to their positions in the company. Norges Bank bought a new position in DigitalOcean during the second quarter valued at approximately $22,633,000. Alyeska Investment Group L.P. bought a new position in shares of DigitalOcean during the 3rd quarter valued at $21,808,000. Arrowstreet Capital Limited Partnership lifted its stake in shares of DigitalOcean by 90.9% in the 4th quarter. Arrowstreet Capital Limited Partnership now owns 1,194,845 shares of the company’s stock valued at $57,496,000 after purchasing an additional 568,823 shares during the last quarter. Vanguard Group Inc. boosted its holdings in DigitalOcean by 5.0% in the third quarter. Vanguard Group Inc. now owns 9,362,889 shares of the company’s stock worth $319,836,000 after purchasing an additional 442,617 shares in the last quarter. Finally, Franklin Resources Inc. increased its position in DigitalOcean by 784.2% during the fourth quarter. Franklin Resources Inc. now owns 494,314 shares of the company’s stock worth $23,786,000 after buying an additional 438,411 shares during the last quarter. 49.77% of the stock is owned by hedge funds and other institutional investors.

DigitalOcean Company Profile

DigitalOcean Holdings, Inc is a cloud infrastructure provider that focuses on simplicity, performance and developer experience. The company offers a range of cloud services designed to help software developers, startups and small- to medium-sized businesses deploy, manage and scale applications. Its flagship offering, Droplets, provides virtual private servers that can be configured with various CPU, memory and storage options. In addition to compute instances, DigitalOcean’s platform includes managed Kubernetes, scalable object and block storage, managed databases, load balancers and networking capabilities such as Virtual Private Cloud (VPC) and Floating IPs.

Founded in 2011 and headquartered in New York City, DigitalOcean was created with the goal of making cloud computing more accessible to individual developers and smaller teams.