DigitalOcean (NYSE:DOCN – Get Free Report) and Applied Digital (NASDAQ:APLD – Get Free Report) are both technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, profitability, analyst recommendations and valuation.
Analyst Ratings
This is a breakdown of current recommendations for DigitalOcean and Applied Digital, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| DigitalOcean | 0 | 3 | 12 | 2 | 2.94 |
| Applied Digital | 2 | 1 | 11 | 4 | 2.94 |
DigitalOcean currently has a consensus target price of $152.81, indicating a potential upside of 17.55%. Applied Digital has a consensus target price of $66.50, indicating a potential upside of 136.49%. Given Applied Digital’s stronger consensus rating and higher probable upside, analysts plainly believe Applied Digital is more favorable than DigitalOcean.
Volatility & Risk
Earnings and Valuation
This table compares DigitalOcean and Applied Digital”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| DigitalOcean | $901.43 million | 15.05 | $259.26 million | $2.19 | 59.36 |
| Applied Digital | $611.31 million | 13.41 | -$244.00 million | ($0.89) | -31.60 |
DigitalOcean has higher revenue and earnings than Applied Digital. Applied Digital is trading at a lower price-to-earnings ratio than DigitalOcean, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares DigitalOcean and Applied Digital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| DigitalOcean | 23.26% | 31.01% | 5.76% |
| Applied Digital | -37.78% | -16.42% | -4.00% |
Insider and Institutional Ownership
49.8% of DigitalOcean shares are held by institutional investors. Comparatively, 65.7% of Applied Digital shares are held by institutional investors. 1.0% of DigitalOcean shares are held by insiders. Comparatively, 9.5% of Applied Digital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
DigitalOcean beats Applied Digital on 9 of the 15 factors compared between the two stocks.
About DigitalOcean
DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC). The company also provides platform-as-a-service (PaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as software-as-a-service (SaaS), including managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. In addition, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU virtual machines for scaling AI applications; Notebooks, a simple cloud workspace that runs on GPUs that provides a managed interactive development environment for exploring data, and training and building machine learning models; and Deployments for deploying their machine learning model as an API endpoint. The company’s customers include software engineers, researchers, data scientists, system administrators, students, and hobbyists. Its customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and AI/ML applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.
About Applied Digital
Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services. The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022. Applied Digital Corporation is based in Dallas, Texas.
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