We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
DigitalOcean expects Q2 revenue growth of about 29%, accelerating from 14% a year earlier.
Nine-figure AI commitments should lift RPO above $800 million, more than 10 times the year-ago level.
Contract duration should exceed three years as committed data center capacity reaches about 155 MW.
DigitalOcean (DOCN - Free Report) shares have soared 171.2% year to date, significantly outperforming the Zacks Computer and Technology sector's return of 16.9%. The rally has been fueled by accelerating artificial intelligence (AI) adoption, an increasing number of enterprise clients and improving financial performance as the company transforms itself into an AI-native cloud platform.
However, the momentum has hit a brake in the past three sessions following DigitalOcean’s preliminary second-quarter 2026 results, which were announced on July 7. Shares lost 4.8% to close at $130.49 on July 10 and were roughly 3% down at the time of writing this article.
DOCN expects remaining performance obligations (RPO) to exceed $800 million, up more than 10 times year over year. The increase is being driven by multiple new nine-figure annual customer commitments for AI inference and cloud services. The weighted average contract duration is also expected to rise from 1.6 years to more than three years, significantly improving long-term revenue visibility.
DigitalOcean expects second-quarter revenue growth of approximately 29%, accelerating from 14% in the year-ago quarter. Adjusted EBITDA margin and non-GAAP earnings per share are projected to be at or above the high end of previously issued guidance.
To support growing AI demand, the company has secured an additional 20 megawatts (MW) of committed data center capacity for late 2027 and early 2028, bringing total committed capacity to approximately 155 MW. These large customer commitments reinforce DigitalOcean's position as an emerging AI infrastructure provider while providing greater certainty around future revenues.
AI Expansion Supports DigitalOcean's Growth Story
The preliminary second-quarter outlook builds on DigitalOcean's strong first-quarter execution. In the first quarter of 2026, revenues increased 22% year over year to $258 million, while AI customer annual recurring revenues (ARR) surged 221% year over year to $170 million. ARR from customers generating more than $1 million annually climbed 179% to $183 million, underscoring accelerating adoption among larger enterprise customers.
DigitalOcean has transformed from a traditional cloud infrastructure provider into a full-stack AI-native cloud platform that combines GPU infrastructure, inference services, managed databases, Kubernetes and AI agents within a single integrated platform. This strategy simplifies AI deployment, reduces vendor lock-in and positions the company to benefit from growing enterprise demand for AI inference and agentic workloads. The company continues to invest aggressively in AI infrastructure, product innovation and data center capacity to support future growth.
DOCN’s Earnings Estimate Revision Trend Steady
The Zacks Consensus mark for earnings per share is pegged at 26 cents, unchanged over the past 30 days. The figure implies a year-over-year decrease of 55.93%.
The Zacks Consensus Estimate for second-quarter 2026 revenues is pegged at $274.73 million, indicating year-over-year growth of 25.62%.
DOCN's Zacks Rank & Other Stocks to Consider
Currently, DigitalOcean carries a Zacks Rank #2 (Buy).
View the Zacks #1 Rank List
Image: Bigstock
DigitalOcean's Q2 Preview Signals AI-Driven Growth & Enterprise Wins
Key Takeaways
DigitalOcean (DOCN - Free Report) shares have soared 171.2% year to date, significantly outperforming the Zacks Computer and Technology sector's return of 16.9%. The rally has been fueled by accelerating artificial intelligence (AI) adoption, an increasing number of enterprise clients and improving financial performance as the company transforms itself into an AI-native cloud platform.
However, the momentum has hit a brake in the past three sessions following DigitalOcean’s preliminary second-quarter 2026 results, which were announced on July 7. Shares lost 4.8% to close at $130.49 on July 10 and were roughly 3% down at the time of writing this article.
DOCN expects remaining performance obligations (RPO) to exceed $800 million, up more than 10 times year over year. The increase is being driven by multiple new nine-figure annual customer commitments for AI inference and cloud services. The weighted average contract duration is also expected to rise from 1.6 years to more than three years, significantly improving long-term revenue visibility.
DigitalOcean expects second-quarter revenue growth of approximately 29%, accelerating from 14% in the year-ago quarter. Adjusted EBITDA margin and non-GAAP earnings per share are projected to be at or above the high end of previously issued guidance.
DigitalOcean Holdings, Inc. Price and Consensus
DigitalOcean Holdings, Inc. price-consensus-chart | DigitalOcean Holdings, Inc. Quote
To support growing AI demand, the company has secured an additional 20 megawatts (MW) of committed data center capacity for late 2027 and early 2028, bringing total committed capacity to approximately 155 MW. These large customer commitments reinforce DigitalOcean's position as an emerging AI infrastructure provider while providing greater certainty around future revenues.
AI Expansion Supports DigitalOcean's Growth Story
The preliminary second-quarter outlook builds on DigitalOcean's strong first-quarter execution. In the first quarter of 2026, revenues increased 22% year over year to $258 million, while AI customer annual recurring revenues (ARR) surged 221% year over year to $170 million. ARR from customers generating more than $1 million annually climbed 179% to $183 million, underscoring accelerating adoption among larger enterprise customers.
DigitalOcean has transformed from a traditional cloud infrastructure provider into a full-stack AI-native cloud platform that combines GPU infrastructure, inference services, managed databases, Kubernetes and AI agents within a single integrated platform. This strategy simplifies AI deployment, reduces vendor lock-in and positions the company to benefit from growing enterprise demand for AI inference and agentic workloads. The company continues to invest aggressively in AI infrastructure, product innovation and data center capacity to support future growth.
DOCN’s Earnings Estimate Revision Trend Steady
The Zacks Consensus mark for earnings per share is pegged at 26 cents, unchanged over the past 30 days. The figure implies a year-over-year decrease of 55.93%.
The Zacks Consensus Estimate for second-quarter 2026 revenues is pegged at $274.73 million, indicating year-over-year growth of 25.62%.
DOCN's Zacks Rank & Other Stocks to Consider
Currently, DigitalOcean carries a Zacks Rank #2 (Buy).
Digital Turbine (APPS - Free Report) , Dell Technologies (DELL - Free Report) and Analog Devices (ADI - Free Report) are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Digital Turbine, Dell Technologies and Analog Devices sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
APPS shares have rallied 111.2% in the year-to-date period. The long-term earnings growth rate for Digital Turbine is pegged at 18.98%.
DELL shares have surged 245.5% in the year-to-date period. The long-term earnings growth rate for Dell Technologies is pegged at 26.35%.
Shares of ADI have gained 45.9% in the year-to-date period. The long-term earnings growth rate for Analog Devices is pegged at 28.76%.