Is Cloudflare’s (NET) Edge Computing Momentum Shifting Its Competitive Position in Cybersecurity and AI?

• Cloudflare was recently spotlighted for its strong quarterly performance and expanding presence in cybersecurity and serverless edge computing, as well as its growing relevance in AI-driven sectors.
• While the company’s innovations have attracted investor attention, questions remain about its high valuation and the sustainability of its rapid growth amid intense competition.
• We'll explore how Cloudflare’s momentum in serverless computing and AI reshapes its overall investment narrative in today’s market.

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What Is Cloudflare's Investment Narrative?

To be a shareholder in Cloudflare today, you have to believe in its ability to capture long-term demand from the digital shift towards AI, cybersecurity, and serverless applications. The recent news highlights Cloudflare’s integration with major generative AI platforms and continued expansion in Zero Trust security, which positions the company at the core of critical technology trends. These product updates serve as catalysts, reinforcing the company’s relevance, but the market reaction, driven by AI momentum and rapid stock appreciation, has not significantly altered near-term risks. Cloudflare’s biggest challenges remain its steep valuation compared to peers and ongoing net losses, setting expectations high for future profitability. While the product news supports short-term optimism and momentum, it does not materially reduce risks related to competition, high revenue multiples, or the need to deliver consistent financial results over time. On the other hand, competition from larger rivals could erode Cloudflare’s pricing power.

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Exploring Other Perspectives

Thirty private investors from the Simply Wall St Community offered fair value estimates ranging from just over US$11 to above US$209 per share, underlining how opinions diverge around Cloudflare. Many see the company’s revenue growth as a key catalyst, but fundamental risks to valuation linger. Consider how market participants differ widely in their views on Cloudflare’s financial path and pricing.

Explore 30 other fair value estimates on Cloudflare - why the stock might be worth as much as $209.01!

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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