Michael Wiggins De Oliveira
Deep Value Returns, Equity Investing without Options or Leverage
DigitalOcean's thesis is intact, with a $260 price target by end-2027, because cash flows will ultimately drive value. The market is focused on a rising share count and weaker quarterly free cash flow, legitimate short-term concerns. But revenue growth is expected to accelerate in 2027, and free cash flow could more than double over the next 18 months. The medium-term opportunity requires patience. x.comÂ
DigitalOcean is a buy, with a $260 target by end-2027, because its reaccelerating growth is still cheaply valued. It guides to more than 50% revenue growth in 2027 and could double free cash flow from 2025 levels, yet trades at about 55x forward free cash flow, an adjusted PEG of only around 1.1x. The recent run-up does not change where it is headed. x.comÂ
DigitalOcean could rerate as its new $1 billion infrastructure debt facility funds faster growth, all else equal, a big assumption. It could lift revenue growth to about 60% in 2027 versus 53% consensus, above 50% in 2028 versus 43%, and perhaps 40% in 2029. That would mean about $4 billion of FY29 revenue, GAAP profits, positive free cash flow and rising margins, against a $15 billion market cap, maybe 4x 2029 earnings. Per @sortinolabs, DigitalOcean monetizes megawatts 30-40% above neoclouds. … Show more
DigitalOcean has the most misunderstood balance sheet in AI infrastructure, deleveraging with equity while growth accelerates. It sold $888M of stock at $77, repaid its entire $500M term loan, set aside cash for its 2026 converts and exits the year near 3x leverage with nothing material due until 2030. Growth was 22% last quarter with 25-27% guided, AI customer ARR rose 221%, and a benchmark ranks it first in open-source inference speed. Gross margin fell five points, with no backlog cushion. … Show more
DigitalOcean is becoming the hyperscaler for small businesses, yet trades at the same forward sales multiple as Alphabet. Having already pre-announced the quarter, its results will hinge entirely on forward guidance, which should be very strong. x.com x.comÂ
Continued rotation into software could lift DigitalOcean, a slight laggard in the sector. Its weekly long wicks set up a potential push past $152 in a run-up to earnings. x.com x.comÂ
DigitalOcean is now a core investment as a full cloud and data center play, backed by strong management and strong growth. Its valuation is finally getting to a level that justifies accumulating more, and a drop below $100 would justify building to a full core position. x.comÂ
DigitalOcean is the AI onramp for developers and small businesses that hyperscalers structurally cannot serve profitably, a specific answer to the SaaS-death thesis. AI customer ARR of $170M is growing 221% inside a $1B ARR business. AWS commitments, Azure enterprise agreements and GCP contracts suit $100M+ IT budgets, not a 50-person startup needing GPU compute with a credit card. The quarter beat on revenue and on EPS by 70%, and FY27 growth guidance of 50% compares with a 31% estimate. x.comÂ
DigitalOcean is a quiet pick-and-shovel play on the vibe-coding and AI-app boom, since every indie developer and AI startup needs cheap cloud infrastructure. The stock broke out of the May flag it had been building, holding above the $165 flag top with bullish moving averages and a rising Ichimoku cloud as support. As long as $165 holds, the path of least resistance is up. x.comÂ
DigitalOcean is well positioned after transforming from a developer host into an AI-native cloud, per a Q2 summary from @Finsee_main. Q2 revenue growth accelerated to 29% on AI inference demand, its first nine-figure annual commitments lifted remaining performance obligations 12x to $894M, and guidance points to a Q4 exit growth rate above 35%. Per the same summary, that growth comes with rising capital intensity. x.comÂ
Axon's very strong Q1 and rising bookings support its growth case. Revenue was $807 million versus $779 million expected, EPS $1.61 versus $1.60, and net retention 125%. It guides 2026 revenue growth of 30-32%, with future contracted bookings up 44%. Stock-based compensation remains the main drawback, with about 4.5% share dilution that is high but should come down materially over time. x.com x.comÂ
