Shares of DigitalOcean (Document 2.35%)a provider of simplified cloud computing, was up 16% this week through 1 p.m. ET Friday, according to data from S&P Global Market Intelligence. Since releasing its results on Aug. 8, DigitalOcean’s stock has rallied 29%.

The company’s second-quarter earnings significantly exceeded expectations and highlighted some developments in the field of artificial intelligence (AI) that are continuing to drive the market higher, thereby driving the company’s share price higher.

DigitalOcean: AI also for SMEs

DigitalOcean’s cloud computing solutions are designed for small and medium-sized businesses (SMBs). These customers make up the majority of the company’s customer base. They choose DigitalOcean over the hyperscalers because of the simplicity, affordability, world-class support and reliability that the company offers.

The company’s services are ideal for SMBs (including an automated managed hosting solution), but are not a stripped-down version of what major competitors offer.

In fact, the company is investing heavily in cutting-edge technologies as the AI ​​revolution takes hold. In 2023, it acquired Paperspace, a cloud platform for building and scaling AI applications, for $111 million. DigitalOcean brought its AI capabilities in-house and developed 24 new features in the second quarter, doubling the number of new products compared to the previous six months.

The company hired Bratin Saha as its new Chief Product and Technology Officer in June. Saha previously served as Vice President and General Manager of AI and Machine Learning (ML) at Amazon Web Services. Combining Saha’s AI and ML expertise with its recent acquisition of DigitalOcean, the company saw its AI annual recurring revenue grow by over 200% in the second quarter.

CloudZero, a specialist in cost-effective cloud software, estimates that only 44% of SMBs currently use cloud infrastructure or hosting, so DigitalOcean still has a lot of growth potential.