DigitalOcean TL;DR Version: Might $DOCN Be the AWS of SMEs?
DigitalOcean is one of those rare infrastructure stories that gives you AI exposure. It is simple enough to understand, yet layered enough that investors who only glance at the stock or valuation multiples will miss crucial insights.
I covered this business in great detail in three separate posts (I think in total it’s a 20,000-word analysis). I realize that this is a lot. Hence, this TL;DR post condenses the key ideas from the three-part deep dive into product, moat, valuation, risk, and execution. If you haven't had the time to read the more extensive analysis, this post is for you.
Let me know if you like this format, and then I’ll provide something similar for future deep dives (I’m also planning to do shorter writeups fwiw).
Understanding the Business & Product
DigitalOcean is not trying to outgun AWS – it’s building the most accessible cloud, not the most powerful one.
The core platform spans IaaS and PaaS: compute (“Droplets”), managed DBs, storage, Kubernetes, serverless, networking, and GenAI.
Product design emphasizes simplicity, self-serve onboarding, and transparent pricing – a huge draw for developers and lean teams.
Over 600,000 customers globally, with annualized revenue approaching $843M as of Q1 2025.
New AI-native layers (GPU-backed compute, agentic interfaces, model hosting) add long-term potential – and are already showing 160% YoY ARR growth.
The App Platform and Cloudways (acquisition) help reduce DevOps burden, pushing DO closer to full-stack abstraction.
This is where it gets interesting:
Buffett’s 10% excess return over 50 years turned $10K into $100M. That didn’t come from luck—it came from better decisions, repeated. This blog exists to train that mindset. The rest of this post is for subscribers who want to do the same.