In 2026, many software-as-a-service (SaaS) companies experienced significant stock price declines due to the impact of AI reducing human reliance on their products. However, DigitalOcean thrived by focusing on infrastructure rather than application sales and targeting SMB and mid-market AI-native companies with a full-stack solution. The company's profitability, upmarket motion, and strategic positioning in the AI cloud space contributed to its success, with revenue growth exceeding 20% and strong EBITDA margins. This case highlights the importance of building for consumption rather than seat-based models, moving upmarket, maintaining profitability during downturns, and focusing on net dollar retention (NDR) as a key metric. DigitalOcean's story underscores that being where others aren't looking can be advantageous in volatile market conditions.
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