DocuSign, Inc. (DOCU): A Bull Case Theory

We came across a bullish thesis on DocuSign, Inc. on Value investing subreddit by TolgaDurman. In this article, we will summarize the bulls’ thesis on DOCU. DocuSign, Inc.'s share was trading at $71.35 as of October 9th. DOCU’s trailing and forward P/E were 51.59 and 16.81 respectively according to Yahoo Finance.

DocuSign (DOCU) recently experienced a sharp 12% drop following OpenAI’s introduction of “DocuGPT,” a contract analysis tool designed to extract key terms for review. The market reaction seems to reflect fears of disruption, though analysts at Jefferies view DocuGPT as a single-task tool rather than a full-fledged replacement for DocuSign’s comprehensive offerings. DOCU already integrates AI capabilities within its Identity and Access Management (IAM) and Contract Lifecycle Management (CLM) suites, which provide customers with ready-made, end-to-end solutions rather than bespoke tools.

This positions DocuSign as a more complete, scalable platform for enterprise clients, suggesting the market may have overreacted to the news. From a fundamental's perspective, the company faces headwinds, including a high P/E ratio of approximately 50x and an expected decline in net income this year, which could weigh on sentiment.

Despite these near-term concerns, DocuSign’s core business remains robust, leveraging established client relationships, workflow integration, and recurring subscription revenue. For investors, the recent pullback presents a potential entry point, particularly for those focused on long-term adoption of digital signature and contract management solutions.

While the stock carries valuation risks and short-term volatility, the combination of entrenched enterprise usage, integrated AI enhancements, and the stickiness of its platform creates a compelling narrative that the market may have over-discounted. Overall, DOCU represents an interesting risk/reward opportunity where near-term earnings pressure is balanced by structural growth drivers and resilience in its enterprise SaaS model.

Previously we covered a bullish thesis on Adobe Inc. (ADBE) by jackandjillonthehill in May 2025, which highlighted the company’s high-margin software business, strong free cash flow generation, robust Digital Media and Digital Experience segments, and strategic positioning in AI through Adobe Sensei and Firefly. The company's stock price has depreciated approximately by 7.33% since our coverage. The thesis still stands as Adobe’s entrenched ecosystem and cloud-first model continue to drive growth. TolgaDurman shares a similar bullish perspective but emphasizes DocuSign’s resilience amid AI disruption and its comprehensive IAM and CLM suites, highlighting potential mispricing after the DocuGPT launch.

DocuSign, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held DOCU at the end of the second quarter which was 41 in the previous quarter. While we acknowledge the potential of DOCU as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.