ZS - Better Cloud Stock: Zscaler vs. DigitalOcean
2023-09-12 07:41:00 ET
Zscaler (NASDAQ: ZS) and DigitalOcean (NYSE: DOCN) represent two different ways to invest in the booming cloud software market. Zscaler is a cybersecurity company that provides "zero trust" services that treat everyone as a potential threat. Instead of installing its tools through on-site appliances like most traditional cybersecurity companies, Zscaler offers them as subscription-based cloud services -- which are cheaper and easier to scale as a company grows. DigitalOcean provides cloud infrastructure services to small businesses. Unlike larger cloud platform providers like Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT) , DigitalOcean offers up smaller "droplets" of servers at lower prices.
Both stocks soared to their all-time highs in November 2021. But today, Zscaler and DigitalOcean trade nearly 60% and 80% below those record levels. The bulls retreated as the macro headwinds throttled their revenue growth, and rising interest rates popped their bubbly valuations. Should investors take a chance on either of these out-of-favor growth stocks right now?
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Better Cloud Stock: Zscaler vs. DigitalOcean