DigitalOcean Stock Price Might Jump into the Stratosphere

DigitalOcean DOCN cloud

Each Monday, I share a watchlist with my Surge Point Trader audience. Given that we focus on strong price-trends and breakout small cap stocks, I wanted to give you a glimpse of a stock that I’ll be watching this week. The company name is DigitalOcean. That’s where my eyes will be while everyone else talks about Amazon (NASDAQ:AMZN)and Microsoft (NASDAQ:MSFT).

Amazon Web Services

Both tech giants will report earnings in the coming days, and there will be a frenzy around these names. One of the most important numbers you can expect to see in those earnings reports is the growth of their cloud-computing services. Amazon’s AWS and Microsoft’s Azure dominate the industry.

In the first quarter of 2021, Amazon Web Services reported revenue of $13.5 billion. That crushed analysts’ expectations and signaled a year-over-year growth of 32% for the quarter. The tech giant has seen robust demand in the wake of COVID-19 as more companies move toward cloud data management. What’s so incredible about that report was the news that AWS represented 12% of Amazon’s total revenue but also 47% of its entire operating income.

Microsoft’s Azure

Meanwhile, Microsoft’s Azure saw a 50% increase in revenue growth over the previous quarter. That number is slightly lower than the 59% increase that the company saw in Q1 2020. Investors should know that Microsoft doesn’t report all of its information around Azure. Instead, it includes the group’s numbers in a segment known as its “Intelligent Cloud” business. That group saw a 23% increase in revenue during the first quarter. It generated $15.1 billion.

In the world of cloud, it really is a two-horse game. AWS represented 32% of the global cloud business in Q1 2021. And Microsoft Azure represented 19%. While Google Cloud holds 7%, there is still 42% of the global cloud market share available. And I want you to pay attention to the following company.

Meet DigitalOcean (NYSE:DOCN)

DigitalOcean is a public central cloud firm that works with small- to medium-sized businesses. They are not counting on the growth of large enterprise data like their competitors in Microsoft and Amazon. Instead, they are focused on a different class of companies that need their services to protect data, facilitate business, and grow at breakneck paces.

The company is an incredible growth story. Following its IPO in March, it had a bit of a breakdown. But investors slowly recognized the real potential here. It had 585,000 customers at the onset of Q1 2021. And it has customers in 185 nations.

There is plenty of information out there on why this is a high-growth stock trading at a discount to its peers. I am not heavily focused on this. What I care about is one single trend. The price of the stock. What we see here is a stock that looks to be on the verge of a breakout.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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