Oracle vs. DigitalOcean: Why DOCN Stock Is Surging While ORCL Lags

March 22, 2026 Rachel Kim – Technology Editor Technology

Investors are recalibrating their expectations in the artificial intelligence infrastructure market, shifting focus from established tech giant Oracle to the rapidly expanding DigitalOcean, despite Oracle’s substantial gains in remaining performance obligations. While Oracle reported a 325% year-over-year increase in RPO to $553 billion in its third fiscal quarter of 2026, ending February 28, DigitalOcean’s stock has surged 115% over the past year, significantly outpacing Oracle’s 4% gain.

Oracle’s success has been largely driven by large-scale contracts with major players like OpenAI, Meta Platforms, and Microsoft. However, concerns surrounding OpenAI’s ability to meet its financial obligations to Oracle, coupled with Oracle’s increasing debt to fund infrastructure expansion, have created investor hesitancy. DigitalOcean, in contrast, is pursuing a different strategy, targeting a distinct segment of the market.

DigitalOcean’s platform caters to developers, small and medium-sized businesses, and start-ups, offering a streamlined alternative to the complexities and costs associated with hyperscaler cloud environments. A 2022 Forrester report indicated that DigitalOcean was approximately 50% cheaper than its larger competitors, fueling robust customer growth and a strengthening revenue pipeline.

The company’s 2025 revenue increased by 15% to $901 million, and DigitalOcean has raised its growth estimates, projecting a 21% revenue jump this year and a substantial 30% increase in 2027. A key driver of this growth is the increasing demand for AI solutions.

DigitalOcean offers a full-stack AI infrastructure platform, providing customers with access to not only the necessary hardware – graphics cards and server processors – but also large language models, agentic AI tools, and managed services for building and scaling AI applications. The company’s approach emphasizes flexibility, avoiding long-term contracts and offering transparent, predictable pricing.

Annual run rate (ARR) revenue for DigitalOcean’s AI offerings increased by 150% year-over-year in the fourth quarter of 2025, reaching $120 million. Notably, 70% of this AI-centric ARR stemmed from inference services and general cloud computing services, demonstrating the success of DigitalOcean’s strategy of investing in AI data center hardware and leveraging software-centric offerings.

To meet this growing demand, DigitalOcean plans to add 31 megawatts (MW) of cloud computing capacity this year. While acknowledging that these investments will impact its bottom line, the company anticipates maintaining an unlevered adjusted free cash flow margin of 18% to 20%. The new capacity is expected to initiate contributing to revenue generation from the second quarter of the year.

Currently trading at 8.4 times sales, DigitalOcean commands a slight premium compared to the U.S. Tech sector’s average sales multiple of 8. Analysts suggest this premium is justified by the company’s improving growth trajectory and the potential for further expansion as new capacity comes online. If DigitalOcean maintains a conservative 8 times sales multiple and achieves a projected revenue of $1.78 billion, its market capitalization could reach $14.2 billion, nearly doubling its current value.