DigitalOcean (DOCN) Soars 10.8%: Is Further Upside Left in the Stock?

DigitalOcean Holdings, Inc. DOCN shares rallied 10.8% in the last trading session to close at $68.69. This move can be attributable to notable volume, with a higher number of shares being traded than in a typical session. This compares to the stock's 3.2% loss over the past four weeks.

DigitalOcean is benefiting from strong demand for its Agentic Inference Cloud, driven by AI-native and cloud-native companies scaling production workloads.

This company is expected to post quarterly earnings of $0.27 per share in its upcoming report, which represents a year-over-year change of -51.8%. Revenues are expected to be $249.68 million, up 18.5% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For DigitalOcean, the consensus EPS estimate for the quarter has been revised 58.3% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on DOCN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

DigitalOcean is a member of the Zacks Internet - Software industry. One other stock in the same industry, Palantir Technologies Inc. PLTR, finished the last trading session 0.3% higher at $151.6. PLTR has returned 8.3% over the past month.

For Palantir Technologies, the consensus EPS estimate for the upcoming report has changed -0.2% over the past month to $0.29. This represents a change of +123.1% from what the company reported a year ago. Palantir Technologies currently has a Zacks Rank of #3 (Hold).

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