Did Cloudflare's (NET) Generative AI Security Integration Just Shift Its Enterprise Investment Narrative?

• In late August 2025, Cloudflare announced it is the first Cloud Access Security Broker to integrate with industry-leading generative AI tools, ChatGPT Enterprise, Claude by Anthropic, and Google Gemini, while unveiling advanced enterprise security and control features for AI usage.
• This move addresses increasing organizational demand for real-time oversight and data protection as generative AI tools become deeply embedded in workplace processes.
• We’ll explore how Cloudflare’s new AI integrations and Zero Trust enhancements could influence its long-term investment narrative and differentiation in enterprise security.

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What Is Cloudflare's Investment Narrative?

For anyone considering Cloudflare, the main thesis often centers on its position at the crossroads of internet security, performance, and now, AI oversight. The August 2025 announcement marks a potentially meaningful catalyst, with Cloudflare being the first Cloud Access Security Broker to offer integration with all major generative AI tools. This could fuel short-term enthusiasm, given the urgency enterprises face in controlling AI adoption and securing sensitive data across their networks. At the same time, risks remain: Cloudflare is still unprofitable, with losses narrowing but not eliminated, and its shares are trading well above conventional fair value estimates, supported by aggressive growth assumptions. While these new AI security features may support differentiation and customer stickiness, the overall impact on near-term profitability and valuation may depend on how quickly enterprises adopt the technology and wider competitive response.

On the other side, don’t overlook Cloudflare’s high valuation compared to industry peers, an important consideration for investors seeking margin of safety. Cloudflare's shares are on the way up, but could they be overextended? Uncover how much higher they are than fair value.

Exploring Other Perspectives

Simply Wall St Community members have shared 31 unique fair value targets for Cloudflare, stretching from US$11.11 to just over US$209. This sharp divergence in outlook reflects the uncertainty around Cloudflare’s future profitability and rapid AI adoption, underpinning wide-ranging views on its performance potential. Explore these alternative valuations to see how your perspective compares.

Explore 31 other fair value estimates on Cloudflare - why the stock might be worth less than half the current price!

Build Your Own Cloudflare Narrative

Disagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Cloudflare research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.
• Our free Cloudflare research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Cloudflare's overall financial health at a glance.

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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.

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