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At a Glance
- Cloudflare was disrupted by AI—and now the stock is rebounding as growth accelerates.
- Analysts cheer the news and respond with upgrades and higher price targets.
- The upside outlook includes a forecast of fresh all-time highs, indicating a significant shift in market dynamics and the potential for even loftier prices.
Fears of AI disruption have set up a buying opportunity in Cloudflare (NYSE: NET) stock that may quickly evaporate, as the Q4 2025 results and 2026 guidance were robust. AI is disrupting the Internet, flooding it with agents, and, in the words of Cloudflare’s CEO, it is driving a virtuous flywheel for its cybersecurity business.
Simply put, Cloudflare is critical to AI agent traffic because of its unified, secure network, which accelerates AI applications. The more agents working on the Internet, the greater the demand for Cloudflare services, which are, in turn, driven by AI agents. More equals more in an accelerating cycle.
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Cloudflare Accelerates Growth, Driven by AI
Cloudflare isn’t the first, but it's still a shining example of how AI is positively disrupting its business. The rise of agentic traffic and demand for AI services is driving increased demand for Cloudflare services, as reflected in its Q4 release.
The company’s growth accelerated sequentially and YOY to 33.6%, delivering net revenue of more than $614 million. The growth is underpinned by new, large clients, with FQ4 deal pace at record levels.
Details in the report, including the 34% increase in current remaining performance obligation (cRPO) and the 48% increase in RPO, support the forecast of continued strength. Cloudflare experienced margin pressure in the quarter; however, revenue leverage and operational quality helped to offset it.
The critical takeaways are the 15% increase in adjusted operating income, the 55% increase in adjusted net income, and free cash flow, which more than doubled.
The guidance is mixed, with revenue strength and earnings weakness relative to the consensus forecasts. However, the revision trends and market response suggest that earnings weakness is overlooked in favor of longer-term forecasts. Margin pressure is due in large part to increased marketing and R&D costs that can be controlled in upcoming quarters. Details for investors to focus on include the 30% quarterly growth forecasted for Q1, nearly 500 basis points of YOY acceleration, and free cash flow.
Analysts See Cloudflare Hitting New Highs This Year
The analyst response to Cloudflare’s Q4 results and guidance was mixed, including a single price target reduction. That reduction was offset by several reiterated ratings and price targets, a few price target increases, and at least one upgrade.
The net result was that the Moderate Buy rating firmed, and the consensus price target, which had forecast a 30% upside ahead of the release, increased.
More importantly, the trend in revisions has all new targets in the high-end range, leading this market toward the $300 level.
A move to $300 would be sufficient for an all-time high, confirming the breakout hinted at by price action last year.
In this scenario, Cloudflare stock could rise by $75 to $150 from the critical resistance target within a matter of quarters. Institutional activity is significant due to the 82% ownership rate. The institutional group sold in late 2025, helping to cap the market, but then reverted to accumulation in early 2026, underpinning the stock price rebound.
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Cloudflare Poised to Rebound in 2026
Cloudflare’s post-release action is bullish, resulting in a solid 10% advance at the open. The move puts the market above important moving averages, suggesting a shift in dynamics, but now the market must follow through. Assuming the rebound continues, critical resistance is near $215 and then at the record high. Failing to cross above $215 would be a bad signal, potentially keeping this market range-bound until more potent catalysts emerge.
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