Stifel analyst Brad R. Reback reiterated a Hold rating and $135.00 price target on DigitalOcean (NYSE: DOCN).

The analyst commented, "Clearly DOCN has ridden the GPU wave to accelerating revenue growth and stellar stock performance (+~220% YTD) over the last several quarters as the company has effectively tapped into AI Natives in search of capacity (top 25 customers grew 118% YoY in 1Q and represented ~47% of total company revenue growth). With 91MWs of capacity coming online through CY27 (6MW of which powered up late 1Q) growth should continue to accelerate.So, where should the stock trade? Given meaningful capex intensity and relatively short-term contracts, we believe ~40X EPS represents a legitimate target multiple, implying investors are underwriting CY28 EPS of ~$4/share.Based on our sensitivity analysis it appears DOCN would need to generate ARR/MW of $16M-$19M (vs mgmt's >$13M guide), OMs of 30-35%, with ~$180M of interest-expense (assumes ~$30M equipment-cost/MW). Given today's tight GPU market these targets seem plausible, but likely have limited upside."

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Shares of DigitalOcean closed at $155.72 yesterday.