We recently compiled a list of the 15 Software Infrastructure Stocks Outperforming In 2025. In this article, we are going to take a look at where DigitalOcean Holdings Inc. (NYSE:DOCN) stands against the other software infrastructure stocks.
Software stocks had a troubling end to the last year and some even continued to fall during January. After a solid year, profit-taking would have been acceptable. However, the continuous decline in January had investors worried, with some media personalities calling it the end of software stocks.
It didn’t take the market long to change its views though. In general, software stocks are not as negatively impacted by tariffs as hardware stocks. Since Trump took over, people have been evaluating their options and with tariffs on the horizon, found software to be a relatively safe sector.
There were some concerns on the AI front as well. The emergence of DeepSeek AI has meant that companies in the US may not be willing to spend more on their AI ventures. Similarly, businesses could simply use DeepSeek’s much cheaper technology, causing downward pressure on subscription prices for instance. So far, none of this looks like becoming a reality, so on the back of solid earnings, most software stocks have comfortably outperformed the market.
We decided to take a look at the top 15 stocks that are outperforming the market so far this year. To come up with our list of 15 software infrastructure stocks outperforming in 2025, we only considered stocks with a market cap of at least 2 billion that were outpacing the broader market till the end of last week.
A close up view of a laptop computer, the cloud computing platform displayed on the screen.
DigitalOcean Holdings Inc. (NYSE:DOCN)
DigitalOcean Holdings Inc. is a cloud computing platform that offers on-demand infrastructure and platform tools for growing & small online businesses, start-ups, and developers. The company also offers platform-as-a-service (PaaS), infrastructure-as-a-service (IaaS), and software-as-a-service (SaaS) solutions. The stock is up 31% so far this year.
DOCN provides affordable cloud computing services to small and medium enterprises. This is a growing market and one that the company intends to dominate. AMD’s acquisition of Vultr, which operates a similar business, is proof that this TAM is big enough. It also validates the company’s business model.
Even though the company’s growth has slowed down, it still outpaces the broader cloud-computing industry by a long margin. DOCN overhauled its leadership in the last two years and switched from a finance-focused executive team to a technology-focused team. This team may be inexperienced but so far is delivering well. Here’s what Citi analyst Mark Zhang had to say about the company:
DOCN gradually re-building credibility may take time, but multiple identifiable levers to re-accelerate organic growth (lucratively re-engage and upsell the base, lower-end hyperscaler logo wins, ramping top-of-funnel efforts) underwrite our conviction on consistent topline and profitability upside going forward.
The stock lost 23% in value in a matter of three months but the current rally has recovered all the losses. In hindsight, it was a good opportunity to buy this strong stock and that opportunity is still out there for the taking.
Overall DOCN ranks 5th on our list of the software infrastructure stocks outperforming in 2025. While we acknowledge the potential of DOCN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as DOCN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.