Comparing AI-focused Cloud Stocks: CoreWeave against DigitalOcean
In the rapidly evolving landscape of cloud computing, two companies are making waves in the AI sector: CoreWeave and DigitalOcean. Though they share the same goal of providing cloud-based services, their strategies, focus, and growth potential differ significantly.
CoreWeave, a hyperscaler specialising in GPU clouds optimised for AI/deep learning workloads, has made a name for itself by serving marquee clients like Microsoft, OpenAI, and Google. After transitioning from Ethereum mining to AI tasks in 2018, CoreWeave has raised over $7 billion, completed an IPO, and reported nearly $1 billion quarterly revenue in Q1 2025.
The company operates 33 data centers across the U.S. and Europe, a stark contrast from the three it had at the end of 2022. CoreWeave's technology is powered by ultra-large GPU clusters, including Nvidia's H100 GPUs, and advanced networking for multi-GPU training. The company's aggressive business strategy, which involves rapid expansion in the cloud and AI markets, has led to steep losses but has also attracted investments from tech giants like Nvidia, Cisco, and others.
CoreWeave's projected revenue for 2027 is a staggering $16.7 billion, indicating a CAGR of 106% from 2024 to 2027. However, the company is expected to turn profitable only in its final year of this period.
DigitalOcean, on the other hand, caters to smaller businesses by dividing its cloud servers into more affordable slices. Its focus is on providing a scalable platform for these customers, offering GPU rentals (AMD and Nvidia), including H100 class GPUs, and emphasising simplicity and affordable access rather than hyperscale.
DigitalOcean's market cap is $2.7 billion, valued at 3 times this year's sales. The company has maintained profitability over the past two years and operates 15 data centers across nine geographic regions, up from 14 at the end of 2022.
DigitalOcean's projected revenue for 2027 is $1.2 billion, indicating a CAGR of 14% from 2024 to 2027. The company's net income is expected to rise at a CAGR of 29% from 2024 to 2027, reaching $179 million.
DigitalOcean's strategy is more conservative, prioritising profit growth over expansion. The company's stock trades at a moderate valuation, reflecting steady but smaller-scale financials compared to hyperscalers.
In summary, CoreWeave exhibits strong upside potential as a hyperscaler with deep enterprise integration, cutting-edge hardware, and massive scale tailored to high-end AI workloads. Its growth depends on capturing the expanding demand for large-scale, high-performance AI infrastructure.
DigitalOcean, on the other hand, offers attractive growth in the fast-growing AI segment for SMBs and startups. Its upside comes from improved adoption among smaller developers and favourable valuation with steady financial improvement, but lacks the hyperscale footprint of CoreWeave.
Both companies have strong growth prospects in AI cloud computing but serve different market niches, with CoreWeave focusing on hyperscale GPU cloud and DigitalOcean on scalable, affordable AI cloud services for SMBs.
[1] DigitalOcean Acquires Paperspace to Add Cloud-Based GPUs [2] CoreWeave Raises $700 Million in Series E Funding [3] CoreWeave's IPO: What You Need to Know [4] DigitalOcean's Q1 2023 Earnings Report
Read also:
- Innovative Garments and Accessories Producing Energy: Exploring Unconventional Sources for Renewable Power
- MoneyGram's Investment in 'Drive to Survive' Yielded Results?
- Irish and German governments will collaborate with ESB on a groundbreaking green hydrogen study.
- The Good Rice Alliance has given 'Ae' a high pre-evaluation ranking, as recognized by BeZero Carbon.
