DigitalOcean (NYSE:DOCN) & Applied Digital (NASDAQ:APLD) Financial Comparison
by Tristan Rich · The Markets DailyApplied Digital (NASDAQ:APLD – Get Free Report) and DigitalOcean (NYSE:DOCN – Get Free Report) are both technology companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.
Analyst Ratings
This is a breakdown of recent ratings and price targets for Applied Digital and DigitalOcean, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Applied Digital | 2 | 1 | 11 | 3 | 2.88 |
| DigitalOcean | 0 | 3 | 12 | 2 | 2.94 |
Applied Digital presently has a consensus price target of $68.15, suggesting a potential upside of 177.26%. DigitalOcean has a consensus price target of $152.81, suggesting a potential upside of 27.32%. Given Applied Digital’s higher possible upside, research analysts clearly believe Applied Digital is more favorable than DigitalOcean.
Risk & Volatility
Applied Digital has a beta of 5.72, meaning that its share price is 472% more volatile than the S&P 500. Comparatively, DigitalOcean has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500.
Profitability
This table compares Applied Digital and DigitalOcean’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Applied Digital | -37.78% | -16.42% | -4.00% |
| DigitalOcean | 23.26% | 31.01% | 5.76% |
Valuation and Earnings
This table compares Applied Digital and DigitalOcean”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Applied Digital | $611.31 million | 11.72 | -$244.00 million | ($0.89) | -27.62 |
| DigitalOcean | $1.01 billion | 12.39 | $259.26 million | $2.19 | 54.80 |
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.
Institutional & Insider Ownership
65.7% of Applied Digital shares are owned by institutional investors. Comparatively, 49.8% of DigitalOcean shares are owned by institutional investors. 9.5% of Applied Digital shares are owned by company insiders. Comparatively, 1.0% of DigitalOcean shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Summary
DigitalOcean beats Applied Digital on 10 of the 15 factors compared between the two stocks.
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.
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.