DigitalOcean Holdings (DOCN) could sustain its momentum into 2026 following its strong Q3 results and the multiple 8-figure deals is signed after closing the quarter, Morgan Stanley said in a Thursday note.

The company reported non-GAAP net income Wednesday of $0.54 per diluted share, from $0.52 a year earlier, as revenue rose to $229.6 million from $198.5 million. Morgan Stanley noted that Q3 revenue and annual recurring revenue growth topped expectations, with artificial intelligence revenue more than doubling for the fifth consecutive quarter.

"DigitalOcean continues to benefit from increasing mix of faster growing large customers, who are adopting more products and migrating workloads," the investment firm said, noting the increase in both the number of large customers and the group's revenue contribution.

Morgan Stanley also highlighted the acceleration of DigitalOcean 18% to 20% growth target to 2026, from 2027 previously, implying that the company expects H2 2026 growth to exceed 20%.

Morgan Stanley raised its price target on DigitalOcean Holdings stock to %56 from $44, while maintaining its overweight rating.

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