DigitalOcean's AI Push Lifts DOCN 1.66% on $340M Volume as Stock Climbs to 315th in Market Activity

On August 12, 2025, DigitalOcean (DOCN) rose 1.66% with a trading volume of $340 million, ranking 315th in market activity. The stock’s recent performance reflects broader strategic shifts as the cloud computing platform accelerates its artificial intelligence (AI) initiatives. Following the acquisition of AI startup Paperspace in mid-2023, DigitalOcean has expanded its Gradient AI platform, enabling customers to develop AI models without managing underlying infrastructure. This platform, coupled with GPU-equipped virtual servers, has driven AI-related revenue to more than double year-over-year in Q2 2025, contributing to heightened investor interest.

Under CEO Paddy Srinivasan, the company has prioritized scaling its AI capabilities while maintaining its core value proposition as a simplified alternative to major cloud providers. Q2 results highlighted a 14% year-over-year revenue increase, with Scalers+ customers—those spending at least $100,000 annually—rising 23% in number and generating 35% higher revenue. This shift toward larger clients has improved revenue predictability, with 24% of total revenue now derived from roughly 500 high-spending accounts. The net dollar retention rate reached 99%, supported by the launch of over 60 new features in Q2, including the general availability of the Gradient AI platform.

DigitalOcean raised its full-year revenue guidance to 13.8%-14.3% growth and projected free-cash-flow margins of 17%-19%. Despite initial cash flow pressures from AI infrastructure investments, the segment’s rapid adoption appears to be offsetting costs. The company’s market exposure remains distinct from peers reliant on enterprise clients, potentially insulating it from cost-cutting trends in economic downturns. With a price-to-free-cash-flow ratio of under 19, the stock is positioned as a long-term growth play, though macroeconomic volatility could pose near-term risks.

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