DigitalOcean (NYSE:DOCN) just dropped a solid Q4, driving its share price up nearly 13% at 10.57am. The company is crushing estimates with $205 million in revenueup 13% year-over-year. Net income climbed 15% to $18 million, while adjusted EBITDA margin landed at a strong 42%. The cloud provider, known for catering to startups and SMBs, went all in on AI/ML, rolling out 49 new productsfour times more than last year. The bet on higher-spending customers is paying off, with its top 500 clients now accounting for 22% of total revenue and spending 37% more than the previous year.

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AI-driven expansion is fueling the momentum. DigitalOcean's GenAI Platform and Cloudways Copilot are ramping up automation and managed hosting, while the acquisition of Paperspace supercharged its AI/ML business. Retention is rock solid, with a 99% net dollar retention rate, and management is doubling down on buybacks, signaling confidence in its growth strategy. The company is balancing profitability with expansion, proving it can keep scaling while maintaining strong margins.

Looking ahead, Q1 2025 revenue is projected between $207 million and $209 million, with adjusted EBITDA margin expected to hit 40%. For the full year, revenue could reach as high as $890 million, powered by AI-driven innovation and deepening relationships with high-value customers. With the cloud market getting increasingly competitive, DigitalOcean's ability to sustain its AI momentum and retain top-tier clients will be key. Investors are watching closely to see if the company can keep this winning streak going into 2025.