Goldman Sachs Sees a "Flight to Quality" in Artificial Intelligence (AI). This Stock Fits the Bill for 2026.

If it feels like the euphoria once surrounding the artificial intelligence (AI) industry's stocks has shifted into something a little more discerning, you're not imagining things. Investors and analysts alike are finally starting to ask when -- or even if -- the payoffs on big investments in AI are coming. If there's no clear good answer, the market's moving on to more promising prospects. As investment research outfit Goldman Sachs described it, we're seeing a "flight to quality."

Plenty of companies offer adequate quality, of course, turning demand for artificial intelligence into real revenue and real profits. There's one company, however, that arguably brings the best balance of risk and reward and reliability to the table. That's DigitalOcean (NYSE: DOCN).

What makes DigitalOcean so special?

It's clearly not the household name that Nvidia, Palantir Technologies, or a handful of other artificial intelligence powerhouses are. In fact, there's a good chance you've never even heard of it. There's also a good chance, however, you've benefited from its service without even realizing it.

DigitalOcean offers access to AI-capable data centers. Online video gaming outfit Cheddar, workflow automation platform Scribe, and digital video delivery-management service provider Cerberus are just some of its customers that count on DigitalOcean's top-tier tech.

And that's key to the bullish thesis here. While at first glance DigitalOcean doesn't look too terribly different from any of the other data center owners/operators in the business, it is. Chief among these differences is the platform's ease of use, allowing customers to create relatively complex solutions with just a click (or two).

The most marketable of these technological solutions are so-called "droplets," or virtual computing environments that only need to exist for a very short while. The company offers per-second billing on droplets, providing amazing affordability compared to other infrastructure outfits' solutions and billing practices. Perhaps the most exciting aspect of this company's offerings, however, is its Gradient AI tech built specifically for inference.

Inference, in simplest terms, is a relatively new kind of machine learning. The earliest iterations of artificial intelligence relied on access to a massive amount of known information just to deliver some of it back to users as requested. With inference, AI platforms are figuring out how to respond to requests without access to all relevant information by deducing what they can based on information they do have.

Image source: Getty Images.

Of course, DigitalOcean also offers all of the more basic artificial intelligence infrastructure solutions you'd expect of one of the more prolific names in the business.

The past and projected numbers tell the story

But does DigitalOcean actually bring the quality that Goldman is talking about right here, right now?

The numbers certainly suggest it does. Last quarter's top line of $242 million was up 18% year over year, accelerating its full-year revenue growth rate of 15% to $901 million. Analysts expect sales growth to continue accelerating to a pace of more than 21% this year -- with 2026 top-line projections currently sitting at just under $1.1 billion -- before accelerating to 30% growth next year when the company's expected to report revenue of more than $1.4 billion. That's impressive, even if not particularly unusual for this sliver of the artificial intelligence industry at this time.

What's so head-turning about DigitalOcean right now is that it has been, is, and is expected to remain, increasingly profitable. Although non-GAAP adjustments to generally accepted accounting principles (GAAP) earnings, along with plans to make some serious investments in capacity, are making it a bit difficult to determine exactly how much bottom-line progress is actually being made here, taking a step back and looking at a longer-term outlook confirms at least most analysts think this company is on the right track.

Data sources: MarketWatch and Simply Wall St. Chart by author.

And the required tailwind is certainly still in place. Although a bunch of artificial intelligence stocks are currently being punished for failing to live up to the hype, the need for the business's existence and continued growth isn't in question. In fact, despite the recent turbulence many AI stocks have experienced as investors rethink the actual long-term value of their underlying companies, Global Market Insights expects the worldwide AI data center business to grow at an average annualized pace of more than 35% through 2034.

Best of the best

It's not the only "quality" name from the artificial intelligence industry worth owning right now. There are others. But DigitalOcean offers a very attractive balance of risk and reward and reliability -- and potential long-term upside -- that the vast majority of those other prospects just don't right now.

February's lull may be all the discount you're going to see from this ticker for a while, particularly in light of analysts' consensus one-year price target of $75, which is more than 20% above the stock's present price. Don't overthink things here.

James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DigitalOcean, Goldman Sachs Group, Nvidia, and Palantir Technologies. The Motley Fool has a disclosure policy.