Cloudflare (NET) AI Stock Analysis

• Market Cap: $66.97B
• Dividend Yield: N/A
• Average Volume (3M): 5.46M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.79
• Revenue Growth: 28.06%
• EPS Growth: -7.44%
• Country: US
• Employees: 4,400
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.28
• Shares Outstanding: 315,250,200
• 10 Day Avg. Volume: 6,498,658
• 30 Day Avg. Volume: 5,462,740
• PEG Ratio: -25.75
• Price to Book (P/B): 47.08
• Price to Sales (P/S): 31.69
• P/FCF Ratio: 238.93
• Enterprise Value/Market Cap: 0.88
• Enterprise Value/Revenue: 27.27
• Enterprise Value/Gross Profit: 36.51
• Enterprise Value/Ebitda: 1.30K
• 1Y Price Target: $231.80
• Price Target Upside: 30.86% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27
• EPS Forecast (FY): 1.12
• Revenue Forecast (FY): $2.79B

• Rating: 57 Neutral
• Price Target: $180.00 ▲(1.61% Upside)
• Action: Reiterated Date: 02/12/26
• Date: Action: Reiterated 02/12/26

NET scores mid-range primarily due to strong earnings-call guidance and improving cash generation, which offset ongoing GAAP profitability shortfalls and higher balance-sheet leverage. The score is further constrained by weak technical trends (price below key moving averages with negative MACD) and limited valuation support given the negative P/E and no dividend yield.

Positive Factors

Improving Cash Generation

Cloudflare has shifted from negative to materially positive free cash flow with TTM operating cash flow and FCF both accelerating. Durable cash generation increases strategic flexibility to fund capex, product investment, and deleveraging without relying on equity issuance, aiding sustainability over 2–6 months.

Enterprise Momentum & High Retention

Rapid expansion of large, high-value customers and a 120% DBNRR imply strong product stickiness and upsell economics. Enterprise traction drives predictable recurring revenue, higher ACV and RPO, and supports durable revenue growth and margin leverage as sales productivity scales over months.

Developer Platform & AI Tailwind

A large developer community and rising agent/AI traffic create network effects that expand usage of Workers and adjacent services. This structural demand shift embeds Cloudflare into AI workloads, potentially increasing long-term addressable market and cross-sell opportunities across security and performance offerings.

Negative Factors

Elevated Leverage

Debt rose materially year-over-year, leaving leverage high relative to equity. Until GAAP profitability consistently improves, elevated debt increases financial risk, constrains flexibility for M&A or buybacks, and makes the business more sensitive to interest rate and cash-flow variability over the medium term.

Gross Margin Pressure & Higher CapEx

A declining gross margin and a planned increase in network capital intensity compress structural margin potential. Higher paid-traffic COGS allocation and elevated network CapEx raise the revenue breakeven for margin recovery and require sustained pricing power or mix improvements to restore long-term margin targets.

Rising Revenue Variability from Usage Mix

A growing share of usage- and pool-of-funds contracts increases quarter-to-quarter revenue volatility and complicates predictability. This structural mix shift can lead to lumpy recognition, forecasting challenges, and greater working-capital swings, demanding tighter ARR governance and sales cadence to maintain durable revenue visibility.

Cloudflare Business Overview & Revenue Model

Company Description

CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company offers an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices. Its security products comprise cloud firewall, bot management, distributed denial of service, IoT, SSL/TLS, secure origin connection, and rate limiting products. The company also offers performance solutions, which include content delivery and intelligent routing, as well as content, mobile, and image optimization solutions. In addition, it provides reliability solutions comprising load balancing, anycast network, virtual backbone, DNS, DNS resolver, online, and virtual waiting room solutions. Further, the company offers Cloudflare internal infrastructure solutions, including on-ramps, which connect users, devices, or locations to its network; and filters, which are the products that protect, inspect, and privilege data. Additionally, it provides developer-based solutions, such as serverless computing/programmable network, website development, domain registration, Cloudflare apps, analytics, and data localization management; Consumer DNS Resolver, a consumer app to browse the Internet; and Consumer VPN for consumers to secure and accelerate traffic on mobile devices. The company serves customers in the technology, healthcare, financial services, consumer and retail, and non-profit industries, as well as government. CloudFlare, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

How the Company Makes Money

Cloudflare generates revenue primarily through a subscription-based model, offering tiered pricing plans for its various services, which include enterprise solutions and add-ons. The company has several key revenue streams, including monthly or annual subscriptions for its CDN services, security features, and performance optimization tools. Additionally, Cloudflare offers a free tier to attract new customers, with the hope that they will eventually upgrade to paid plans. Significant partnerships with cloud service providers, technology platforms, and enterprise clients also contribute to its earnings, as these collaborations often lead to increased service adoption and higher revenue from advanced features and services.

Cloudflare Financial Statement Overview

Summary

Cash flow is a major positive (TTM operating cash flow ~$667M; TTM free cash flow ~$332M, accelerating), but overall profitability is still a gap with negative TTM net margin (~-4.7%). Balance-sheet risk is elevated due to sharply higher debt in TTM (~$3.5B) and high debt-to-equity (~2.41), which offsets strong gross margins (~mid-70% range).

Income Statement

Cloudflare shows strong top-line momentum and consistently high gross profitability, with gross margin holding around the mid-70% range (TTM (Trailing-Twelve-Months): ~74.5%). Revenue growth is solid in TTM (Trailing-Twelve-Months) (~7.7%) and has been strong historically, but profitability remains the main gap: EBIT and net income are still negative in TTM (Trailing-Twelve-Months) (net margin ~-4.7%). The trajectory is improving versus 2021–2022 losses, yet the company has not converted that scale into sustained bottom-line profits.

Balance Sheet

The balance sheet carries meaningful leverage. Total debt increased sharply in TTM (Trailing-Twelve-Months) (~$3.5B) versus 2024 (~$1.46B), pushing debt relative to equity higher (TTM (Trailing-Twelve-Months) debt-to-equity ~2.41). Equity has grown, but returns to shareholders remain negative (TTM (Trailing-Twelve-Months) return on equity ~-7.5%) due to ongoing losses. Overall, the company has a sizable asset base, but the increased leverage raises financial risk until profitability becomes more consistent.

Cash Flow

Cash generation is a clear strength. Operating cash flow is strong and improving (TTM (Trailing-Twelve-Months): ~$667M vs 2024: ~$380M), and free cash flow is positive and accelerating (TTM (Trailing-Twelve-Months): ~$332M; free cash flow growth ~53%). Free cash flow has materially improved from negative levels in 2021–2022, supporting flexibility despite reported net losses. A key watch item is that cash generation does not fully translate into strong earnings yet, but the cash flow trend is favorable.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.17B	1.67B	1.30B	975.24M	656.43M
Gross Profit	1.61B	1.29B	989.74M	742.63M	509.29M
EBITDA	88.07M	62.05M	-42.62M	-92.13M	-125.17M
Net Income	-102.27M	-78.80M	-183.95M	-193.38M	-260.31M
Balance Sheet
Total Assets	6.04B	3.30B	2.76B	2.59B	2.37B
Cash, Cash Equivalents and Short-Term Investments	4.10B	1.86B	1.67B	1.65B	1.82B
Total Debt	3.70B	1.46B	1.44B	1.58B	1.29B
Total Liabilities	4.58B	2.25B	2.00B	1.96B	1.56B
Stockholders Equity	1.46B	1.05B	763.05M	623.96M	815.80M
Cash Flow
Free Cash Flow	287.50M	195.39M	119.46M	-39.77M	-43.09M
Operating Cash Flow	603.11M	380.43M	254.41M	123.59M	64.65M
Investing Cash Flow	-1.81B	-330.22M	-186.20M	-235.70M	-709.32M
Financing Cash Flow	2.00B	12.79M	-192.19M	6.35M	847.49M

Cloudflare Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 177.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NET, the sentiment is Negative. The current price of 177.14 is below the 20-day moving average (MA) of 182.31, below the 50-day MA of 189.55, and below the 200-day MA of 195.89, indicating a bearish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 45.08 is Neutral, neither overbought nor oversold. The STOCH value of 56.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NET.

Cloudflare Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTNT	72 Outperform	$60.00B	33.66	135.72%	―	14.78%	22.52%
PANW	72 Outperform	$124.32B	83.55	16.26%	―	15.30%	-60.71%
VRSN	70 Outperform	$20.04B	24.83	―	0.94%	5.47%	-0.03%
ZS	62 Neutral	$27.45B	-644.02	-2.41%	―	23.24%	-8.83%
CRWD	62 Neutral	$104.81B	―	-8.88%	―	22.05%	-341.24%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NET	57 Neutral	$66.97B	―	-8.16%	―	28.06%	-7.44%

Cloudflare Corporate Events

Cloudflare Highlights Strong Q4 Growth and Improving Profitability

On February 10, 2026, Cloudflare reported fourth-quarter and full-year 2025 results showing strong top-line growth and improving profitability metrics, underpinned by rising demand from AI- and agent-driven Internet workloads. Fourth-quarter revenue rose 34% year-over-year to $614.5 million and full-year revenue climbed nearly 30% to $2.17 billion, while the company closed its largest-ever contract and expanded remaining performance obligations, signaling robust enterprise adoption.

Despite a GAAP operating loss of $49.2 million in the quarter and $207.2 million for 2025, Cloudflare delivered meaningful non-GAAP profitability, including Q4 non-GAAP operating income of $89.6 million and free cash flow margins expanding to 16.2% in Q4 and 12.0% for the year. Management framed the rise of AI agents as a structural tailwind that is driving more code and traffic onto its network, reinforcing Cloudflare’s positioning as a core infrastructure provider and strengthening its financial profile for investors, as evidenced by higher operating cash flow and a cash balance exceeding $4.1 billion at year-end 2025.

Cloudflare also reiterated its use of multiple disclosure channels, including its website, investor portal, press site, and social media accounts, to disseminate material information to investors and the public. The company emphasized that supplemental financial data and reconciliations of GAAP to non-GAAP figures are available on its investor relations website as part of its broader effort to provide transparency around financial performance and business trends.

The most recent analyst rating on (NET) stock is a Hold with a $230.00 price target. To see the full list of analyst forecasts on Cloudflare stock, see the NET Stock Forecast page.

Cloudflare Announces Planned Transition in Chief Legal Leadership

On February 6, 2026, Cloudflare, Inc. announced that its Chief Legal Officer, Doug Kramer, has decided to resign from his role after nearly a decade with the company, with his resignation to take effect on March 31, 2026. Following his departure from the position, Kramer will remain with Cloudflare as a senior advisor, while the company expects to elevate current Deputy Chief Legal Officer and Global Head of Public Policy, Alissa Starzak, to succeed him as Chief Legal Officer, signaling a planned and orderly legal leadership transition.

The most recent analyst rating on (NET) stock is a Hold with a $230.00 price target. To see the full list of analyst forecasts on Cloudflare stock, see the NET Stock Forecast page.