Oppenheimer analyst Timothy Horan notes that recently, DigitalOcean has rolled out major new services to its suite. The firm thinks these rollouts will drive sales of legacy services and result in better-than-expected revenue. AI demand is clearly strong and, as VC money continues to pour into the sector, Oppenheimer sees startups and developers adopting DigitalOcean’s GPU infrastructure. Ultimately, the firm sees DigitalOcean able to capitalize on its AI CAPX spend and deliver a greater than 2-times incremental revenue multiple on GPU investment. This should result in revenue growth 2-400 bps higher than Street estimates and drive multiple expansion, Oppenheimer adds. The firm, which has an Outperform rating and a price target of $37 on the shares, says DigitalOcean is a Top Pick for 2024.
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