Building the AI Factory Foundation
DigitalOcean has quietly transformed its infrastructure strategy since acquiring GPU cloud startup Paperspace in July 2023. The $111 million deal laid the groundwork for what the company now calls its AI Factory, a purpose built data center in Richmond, Virginia. This facility runs NVIDIA HGX B300 systems with a 400 Gbps non-blocking RDMA fabric, optimized specifically for AI inference workloads rather than the general purpose computing that hyperscalers prioritize.
During the first quarter of 2026, DigitalOcean added approximately 60 megawatts of committed data center capacity, with plans to more than triple total capacity by early 2028. This rapid expansion signals a deliberate pivot from the company’s historical identity as a low cost cloud alternative for developers toward becoming a specialized inference provider.
Impact and Scope
What sets DigitalOcean apart from AWS, Google, and Microsoft is its focus on distributed, edge based deployments. With 14 data centers across 11 global regions, the company can run inference compute closer to end users, reducing latency for real time applications. The AI Native Cloud platform announced in April 2026 includes an Inference Engine with smart routing, serverless endpoints, and an OpenAI compatible API, all designed to simplify access for SMBs and startups.
The strategy is already showing results. DigitalOcean raised its revenue outlook for 2026 and 2027 after a strong Q1 earnings beat driven by AI demand. The partnership with NVIDIA continues to deepen, with DigitalOcean optimizing its platform for the latest hardware. For businesses that need inference capabilities without hyperscaler complexity or long term contracts, DigitalOcean’s quiet buildout offers a compelling alternative in the rapidly growing edge AI market.
