Digi International (DGII) is drawing fresh attention after launching a Model Context Protocol server that links enterprise AI assistants with its Digi Remote Manager and Genesis platforms, reshaping how customers interact with large connected device fleets.

Those AI and security milestones arrive as Digi International’s share price sits at US$48.84, with a 30 day share price return of 10.6% and a year to date share price return of 13.16%, while its 1 year total shareholder return of 68.94% and 5 year total shareholder return of 146.29% point to stronger gains over longer holding periods.

If this AI connectivity story has your attention, it could be a good moment to see what else is out there among 35 AI infrastructure stocks that fit a similar theme.

With Digi trading at US$48.84 and sitting close to a consensus price target of US$50.50, yet flagged with an intrinsic discount of about 42%, you have to ask: is there still a buying opportunity here, or is the market already pricing in future growth?

Most Popular Narrative: 3.3% Undervalued

With Digi International’s fair value narrative set at $50.50 against a last close of $48.84, the current price sits just below that reference point and puts more focus on the assumptions behind that valuation rather than a big gap to it.

The accelerating transition of customers to Digi's subscription-based and recurring revenue solutions, including higher attach rates on IoT products such as cellular routers and infrastructure management devices, points to ongoing double-digit annual recurring revenue (ARR) growth and improved profit margins, boosting both revenue stability and long-term earnings. Increased adoption of cloud and hybrid infrastructure, especially as enterprises and data centers pursue AI and edge deployments, is creating heightened demand for Digi's edge connectivity and remote management solutions, supporting higher sales volumes and more premium-priced contracts, which positively impact topline revenue and net margins.

Curious how a relatively small discount, a higher forward earnings multiple, and a trimmed margin outlook can still support that $50.50 figure? The widely followed narrative leans heavily on recurring software style revenue and steadier cash flows to justify it, while quietly baking in specific growth rates and a precise discount rate. If you want to see exactly how those moving parts fit together, the full story lays out the numbers in black and white.

Result: Fair Value of $50.50 (UNDERVALUED)

However, there is still the risk that flat 2025 revenue guidance and regional softness, especially in APAC and parts of Europe, could challenge those fair value assumptions.

Another Way To Look At Value

Our DCF model offers a very different perspective compared to the fair value narrative. With an estimated future cash flow value of $83.97 versus a share price of $48.84, it suggests that DGII may be trading at a large discount. This raises an important question: is this a genuine mispricing, or are the cash flow assumptions too generous?

Next Steps

If this mix of optimism and caution feels familiar, now is a good time to look through the numbers yourself and form your own view using 3 key rewards and 1 important warning sign.

Ready to hunt for more ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.