Cloudflare (NET) AI Stock Analysis

• Market Cap: $74.78B
• Dividend Yield: N/A
• Average Volume (3M): 5.17M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.65
• 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: 317,576,100
• 10 Day Avg. Volume: 3,352,608
• 30 Day Avg. Volume: 5,169,789
• PEG Ratio: -25.75
• Price to Book (P/B): 47.08
• Price to Sales (P/S): 31.69
• P/FCF Ratio: 211.80
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 34.93
• Enterprise Value/Gross Profit: 46.78
• Enterprise Value/Ebitda: 318.99
• 1Y Price Target: $230.42
• Price Target Upside: 8.46% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 26
• EPS Forecast (FY): 1.12
• Revenue Forecast (FY): $2.79B

• Rating: 57 Neutral
• Price Target: $220.00 ▲(3.55% 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

Cash Generation

Sustained and improving operating and free cash flow provide durable financial flexibility to fund network capex, sales expansion, and strategic investments without immediate reliance on equity markets. This strengthens execution capacity while the company works toward consistent GAAP profitability.

Enterprise Momentum & Large Contracts

Rapidly growing new ACV and multi-year large deals indicate strong enterprise trust and higher contract visibility. Large, lasting contracts raise recurring revenue quality, improve upsell potential, and deepen customer dependence on the platform, supporting predictable expansion over multiple quarters.

Developer Platform & AI Tailwind

High developer adoption and rising AI/agent workload drive structural demand for edge compute and security services. Embedding developers and AI workloads creates sticky usage patterns, broadens addressable market, and supports cross-product monetization over the medium term.

Negative Factors

Elevated Leverage

Material increase in leverage raises financial risk and reduces flexibility if revenue or margins unexpectedly weaken. Higher interest or covenant pressure could constrain capital allocation choices and heighten refinancing risk until consistent net profitability and cash conversion are firmly established.

Gross Margin Pressure & Higher CapEx

Rising paid-traffic allocation and elevated network capex increase ongoing cost and capital intensity, compressing structural gross margins. If higher capex and COGS allocation persist to support traffic growth, long-term margin targets may be harder to achieve without offsetting pricing or efficiency gains.

Revenue Variability from Usage-Based Deals

A rising share of usage-based and pool-of-funds contracts creates more volatile quarter-to-quarter revenue and makes forecasting, capacity planning, and margin management more difficult. Over time this can complicate sales compensation, guide reliability, and enterprise budgeting relationships.

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 primarily makes money by selling subscription-based cloud services to customers on contracted terms, typically priced by service tier, usage, and/or the scope of deployment (e.g., number of domains, applications, users, traffic, or security features). The company’s core revenue stream is recurring subscription revenue from its integrated platform of security and performance products, including application and network security (such as DDoS protection and web application security), performance services (such as content delivery and traffic acceleration), and enterprise connectivity and access offerings (such as Zero Trust/ZTNA and secure web gateway capabilities). Cloudflare also generates revenue from usage-based components and add-on services where pricing can scale with consumption (for example, higher traffic volumes, advanced security features, or additional platform capabilities). It sells through a combination of self-serve digital channels (particularly for smaller customers and developers) and an enterprise sales motion for larger organizations, with expansion revenue driven by customers adopting additional products over time on the same platform. Significant factors supporting earnings include the breadth of its global edge network (which enables delivering multiple services from the same infrastructure), customer retention and upsell/cross-sell across product families, and partnerships/channels such as resellers, systems integrators, managed service providers, and cloud/platform ecosystem integrations that help drive enterprise adoption.

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	207.43M	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	324.32M	195.39M	119.46M	-39.77M	-43.09M
Operating Cash Flow	666.87M	380.43M	254.41M	123.59M	64.65M
Investing Cash Flow	-1.81B	-330.22M	-186.20M	-235.70M	-709.32M
Financing Cash Flow	1.94B	12.79M	-192.19M	6.35M	847.49M

Cloudflare Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 212.45
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NET, the sentiment is Positive. The current price of 212.45 is above the 20-day moving average (MA) of 188.66, above the 50-day MA of 185.65, and above the 200-day MA of 198.96, indicating a bullish trend. The MACD of 7.33 indicates Negative momentum. The RSI at 65.98 is Neutral, neither overbought nor oversold. The STOCH value of 91.09 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NET.

Cloudflare Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PANW	74 Outperform	$136.28B	71.18	15.49%	―	15.30%	-60.71%
FTNT	72 Outperform	$61.74B	31.84	123.64%	―	14.78%	22.52%
VRSN	70 Outperform	$21.88B	27.19	-40.40%	0.94%	5.47%	-0.03%
CRWD	69 Neutral	$112.04B	-686.05	-4.68%	―	22.05%	-341.24%
ZS	66 Neutral	$24.72B	-232.70	-3.48%	―	23.24%	-8.83%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NET	57 Neutral	$74.78B	-671.68	-7.48%	―	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.