DigitalOcean: The Inference Cloud Thesis Has Still Not Priced In

DigitalOcean (DOCN) maintains a Buy rating with a new $105 price target, driven by a strategic pivot toward usage-based AI inference services. Q4 2025 results validate the thesis: $901M revenue (+15% YoY), $259M net income (29% margin), and $120M AI ARR, 70% from inference and core cloud. Customer retention is exceptional, with 0% churn in million-dollar cohorts and rapid expansion in $500K and $100K tiers, supporting sustainable growth.