Core Scientific (NASDAQ:CORZ) and DigitalOcean (NYSE:DOCN) Critical Review

DigitalOcean (NYSE:DOCN) and Core Scientific (NASDAQ:CORZ) are both technology companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Volatility & Risk

DigitalOcean has a beta of 1.7, suggesting that its share price is 70% more volatile than the S&P 500. Comparatively, Core Scientific has a beta of 5.49, suggesting that its share price is 449% more volatile than the S&P 500.

Profitability

This table compares DigitalOcean and Core Scientific’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DigitalOcean	23.26%	31.01%	5.76%
Core Scientific	-325.50%	N/A	-9.64%

Analyst Recommendations

This is a summary of current recommendations for DigitalOcean and Core Scientific, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DigitalOcean	0	3	12	2	2.94
Core Scientific	1	2	18	2	2.91

DigitalOcean currently has a consensus price target of $152.81, suggesting a potential upside of 17.64%. Core Scientific has a consensus price target of $30.86, suggesting a potential upside of 105.13%. Given Core Scientific’s higher probable upside, analysts clearly believe Core Scientific is more favorable than DigitalOcean.

Earnings & Valuation

This table compares DigitalOcean and Core Scientific”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DigitalOcean	$1.01 billion	13.41	$259.26 million	$2.19	59.31
Core Scientific	$440.31 million	10.98	-$288.62 million	($4.42)	-3.40

DigitalOcean has higher revenue and earnings than Core Scientific. Core Scientific is trading at a lower price-to-earnings ratio than DigitalOcean, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

49.8% of DigitalOcean shares are held by institutional investors. 1.0% of DigitalOcean shares are held by insiders. Comparatively, 1.7% of Core Scientific shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

DigitalOcean beats Core Scientific on 10 of the 14 factors compared between the two stocks.

About DigitalOcean

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC). The company also provides platform-as-a-service (PaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as software-as-a-service (SaaS), including managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. In addition, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU virtual machines for scaling AI applications; Notebooks, a simple cloud workspace that runs on GPUs that provides a managed interactive development environment for exploring data, and training and building machine learning models; and Deployments for deploying their machine learning model as an API endpoint. The company’s customers include software engineers, researchers, data scientists, system administrators, students, and hobbyists. Its customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and AI/ML applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About Core Scientific

Core Scientific, Inc. provides digital asset mining services in North America. It operates through two segments, Mining and Hosting. The company offers blockchain infrastructure, software solutions, and services; and operates data center mining facilities. It also mines digital assets for its own account; and provides hosting services for other large bitcoin miners, which include deployment, monitoring, trouble shooting, optimization, and maintenance of its customers' digital asset mining equipment. In addition, the company provides electrical power, repair, and other infrastructure services to operate, maintain, and earn digital assets; and sells mining equipment to customers. Core Scientific, Inc. was founded in 2017 and is headquartered in Dover, Delaware.