DigitalOcean Holdings Inc. (DOCN) enters 2026 with a powerful setup as AI shifts from experimentation to real deployment across startups and SMBs. Nvidia Corp.’s (NVDA) announcement that it will step away from operating its own cloud business is also an underappreciated catalyst, argues Matthew Timpane, editor at Schaeffer’s Investment Research.
Oracle Corp. (ORCL), Amazon Web Services (AWS), and Azure will all benefit, but DigitalOcean is uniquely positioned as a developer-first alternative to hyperscalers. The company is now offering Nvidia H100 cloud GPUs and building an AI and LLM stack specifically designed for SMBs and AI-native teams.
If Nvidia begins directing customers toward partners instead of the DGX Cloud, DigitalOcean could experience a significant influx of new customers. The fundamental story also continues to improve. DigitalOcean is reaccelerating growth after a year of stabilization and product consolidation.
Higher-value Scalers+ customers now account for a growing share of revenue and have been expanding at a strong double-digit pace as the platform becomes more reliable, more capable, and better aligned with heavier AI workloads. AI services have grown triple digits for multiple quarters, supported by rising GPU capacity and expanding multiyear commitments from AI-native companies.
With better product velocity, improved balance sheet flexibility, and increasing visibility into customer expansion patterns, DigitalOcean is positioned to drive sustained mid-to-high teens growth as investors begin to rerate the business.
From a technical perspective, the stock was recently sitting near the top of a stage 1 accumulation base, and a breakout could fuel a move of 50% or more in 2026. Price has reclaimed its Initial Public Offering (IPO) level, which now serves as support. The Fibonacci retracement levels from the 2021 highs to the 2023 lows create reasonable upside markers, with the 50% retracement at $76 and the 61.8% retracement at $89.50.
Options activity aligns with this view. We are seeing size buyers out in time at the October 60 strike, and based on the premium paid, they would be targeting a move of at least plus-50% into year-end. This is consistent with the developing technical structure and the improving fundamental backdrop.
Sentiment also sets up a favorable dynamic. Short interest is 14.5% of the stock’s available float and the highest it’s been since 2023, giving the stock potential for a short-covering rally as growth reacceleration takes hold. Options remain relatively inexpensive, with the equity’s Schaeffer's Volatility Index (SVI) of 63% ranking in the 12th annual percentile. This signals subdued volatility expectations at a time when the company is entering a stronger phase of execution.
Recommended Action: Buy DOCN.
