After the closing bell Thursday, Cloudflare ( NET 17.76 % ) reported strong fourth-quarter earnings results that carried its share price above$ 150 for the first time since 2021. However, Morgan Stanley scientist Hamza Fodderwala has outlined a bull-case situation for the property to improve by another 16 % to$ 175 per share by year’s finish, and he may amend his forecast higher in light of its sturdy performance in the most recent quarter.
” We believe 2025 could be a breakout year for Cloudflare”, Fodderwala wrote in a subsequent note. He backed that prediction by highlighting the convergence of a number of company tailwinds, including increased sales team efficiency and the making of new artificial intelligence ( AI ) products monetization.
Here’s what buyers should realize about Cloudflare.
Cloudflare performed well in the third quarter.
Cloudflare provides software, system, and security services that protect and promote IT facilities. It operates the fastest sky system on the planet, and handles about 20 % of all internet traffic. That gives Cloudflare a thorough understanding of website performance issues and security threats, which continues to improve its capacity to route traffic quickly and securely.
It reported solid results in the fourth quarter, beating Wall Street’s expectations on the top and bottom lines. Its common established buyer spent 11 % more than a year before, and its client matter increased by 25 % to 237, 714, which is its second right quarter of increased customer growth. In turn, revenue climbed by 27 % to$ 460 million, and net income increased by 27 % to$ 0.19 per diluted share, a 2 percentage point acceleration from the previous quarter.
Mark Anderson, formerly of Palo Alto Networks, was appointed to lead Cloudflare’s sales team next month. That employees shift was part of a broader effort to improve its go-to-market murder, and the company has made good progress. On the , CEO Matthew Prince stated that sales output experienced a double-digit increase for the second consecutive quarter.
Prince even discussed the company’s Staff development platform’s solid adoption, specifically for use cases involving . He claimed that Workers is” the go-to platform for designers who want the best cost performance for AI conclusion and agentic workflows.”
Image cause: Getty Images.
A good success in advantage artificial intelligence
offer network services from the system edge, or, to put it another way, from locations that are actually close to the end users. Through 2030, according to Grand View Research, edge technology sales will increase at a 36 % annualized rate as a result of the demand for border AI services. With the release of R2 Storage and Workers AI in 2023, Cloudflare began taking advantage of that opportunity seriously.
R2 Storage enables programmers to save significant amounts of data for cost-effective purposes when . And Workers AI is an assumption services, supported by Nvidia , that lets builders work AI software on Cloudflare’s system. Because Cloudflare has the fastest sky channel available, those products are convincing as well, and because the system is independent, which means it integrates with public clouds like Amazon and Microsoft.
Importantly, Forrester Research recognized Cloudflare as the market leader in edge development platforms, ranking Workers higher than similar products from Amazon, Microsoft, and Fastly. In its most recent report on edge delivery services, International Data Corporation named Cloudflare as the industry leader, highlighting its strong AI focus.
Cloudflare stock looks expensive
Wall Street expects Cloudflare’s adjusted earnings to grow by 15 % in the next four quarters, and increase at an annualized rate of 37 % over the next three years. In that context, its current valuation of 200 looks expensive. But Wall Street may be underestimating the company’s future growth.
In the last six quarters, Cloudflare’s earnings have overtaken analysts ‘ consensus estimates by an average of 27 %. If that pattern continues, the stock’s current valuation may look more reasonable in hindsight. However, investors should be cautious pursuing this stock at its current price. A more prudent course of action would be to add Cloudflare to your watch list and hold off on buying shares at a loss.