DigitalOcean Holdings (DOCN) is positioned to surpass growth expectations as the artificial intelligence data center capacity shortage continues, though revenue increase will be limited by capacity additions, Oppenheimer said in a Tuesday note.
The demand/supply imbalance in AI data center capacity could extend through the next five to seven years, and drive DigitalOcean's end-state capacity to about 300 megawatts by 2035, the brokerage said.
Oppenheimer said it expects DigitalOcean to deliver a Q1 top-line beat and a modest increase in 2026 revenue outlook, saying its customer checks indicated increasing spending and loyalty to the company's platform.
The company, however, could face challenges in beating its 2027 growth outlook as current capacity limits near-term performance, the investment firm noted.
DigitalOcean is set to release its Q1 results on May 5.
Oppenheimer has an outperform rating and $115 price target on DigitalOcean.
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