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FINWIRES

DigitalOcean Seen as Agentic AI Beneficiary Amid Growth Acceleration, BofA Says

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-- DigitalOcean (DOCN) is positioned as a beneficiary of agentic AI, with planned capacity expansion and a higher mix of inferencing workloads expected to drive revenue and free cash flow growth over the long term, BofA Securities said in a Wednesday note.

The brokerage said that DigitalOcean reported a "strong" Q1 and raised its 2026 revenue growth guidance. The firm now expects 2027 revenue to grow more than 50% from about 30% previously. DigitalOcean also plans to add 60 megawatts of capacity in 2027 that could bring total committed capacity to about 135 megawatts.

The investment firm said that the company has built a "solid" agentic AI platform and is adding significant capacity over the foreseeable future to meet demand. Increased investments are expected to pressure free cash flow margins in the near term, accoridng to the note.

BofA increased its 2026 adjusted earnings estimate for the company to $1.29 from $1.11. Analysts polled by FactSet expect $1.22.

The firm reiterated its buy rating on the stock and increased its price objective to $200 from $107.

Price: $152.65, Change: $-0.13, Percent Change: -0.08%

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