Is DigitalOcean Stock a Buy as Growth Slows?
Cloud computing providers big and small are facing a tougher environment compared to a few years ago. As economic uncertainty ramps up, companies are less eager to expand spending as they try to keep a lid on costs. Industry giant Amazon Web Services (AWS), for example, grew revenue by just 12% year over year in the third quarter.
DigitalOcean's (NYSE: DOCN) customer base doesn't have a ton of overlap with enterprise-heavy AWS, but the developer and small-business-focused cloud provider is still feeling some pain. DigitalOcean's revenue growth slowed down to 16% in the third quarter, and the company expects its growth rate to dip into the high single digits to finish out the year.
The company does expect to eke out double-digit growth in 2024, but just barely. The core business is expected to contribute 5% to the growth rate, managed hosting provider Cloudways is expected to contribute 3% to the growth rate, and AI acquisition Paperspace should deliver another 3% to the growth rate.
Source Fool.com
