Cloudflare's AI-Driven Growth: Stock Surges 55% in 2025 Amid Strong Financial Performance

2025's top AI cloud stock skyrockets 55%; should you bet on more gains? Here's the breakdown

Cloudflare's stock rose 55% this year due to its AI-driven solutions. It reported revenue growth of 29% to $1.67 billion and a 53% increase in non-GAAP net income. Cloudflare's 'Workers AI' service allows efficient AI model execution in the cloud, and the remaining performance obligations indicate robust future prospects. Despite high stock prices, it remains a strong performer.Cloudflare, one of the world's best-known internet security and website performance improvement companies, has had its stock rise 55% so far this year, as per a report. That record increase occurs as the company takes advantage of heightened demand for artificial intelligence (AI)-driven solutions and has become a dominant force in the AI cloud marketplace, reported The Motley Fool. According to the report, in the past 18 months, Cloudflare has been ramping up its graphics processing unit (GPU) utilization throughout its global network. Through these GPUs, customers can support AI workloads in the cloud, capitalizing on a key growth area. The firm's most recent quarter, reported on February 6, indicated high performance, and shares surged 18%. Investors now are keen to know whether such momentum can keep going. Cloudflare ended 2024 with revenue growing 29% to $1.67 billion. Even more striking was the 53% rise in non-GAAP net income, up to $0.75 per share -- well ahead of the company's previous expectations for the year, reported The Motley Fool. The expansion wasn't merely a matter of signing up new customers, but existing customers spending more, particularly on Cloudflare's AI offerings, as per the report. The customers bringing in more than $100,000 in annual revenue for Cloudflare increased by 27%. This shows that more companies are relying on Cloudflare's platform, and its AI offerings are driving this, according to The Motley Fool. The trend of increased spending by customers is set to continue, offering a solid support base for the company's growth in the future. Cloudflare's 'Workers AI' is at the core of its AI solution. With this service, companies can execute AI models in the cloud and create AI apps without the high price of purchasing GPUs or supporting sophisticated infrastructure, as per the report. With access to GPUs on its network worldwide, Cloudflare keeps AI workloads processing fast and efficient, so companies can include AI without handling sluggish or costly substitutes. According to The Motley Fool, Cloudflare CEO Matthew Prince emphasized the attractiveness of 'Workers AI' during a recent earnings call. He said "The model of programming is uniquely suited for building tools like AI agents, and our serverless architecture, which allows you to pay only for what you use based on CPU or GPU type, positions Workers to become the go-to platform for developers who want the best price-performance for AI inference and agentic workflows," as quoted by The Motley Fool. Another positive indicator of Cloudflare's potential future performance is its increasing remaining performance obligations (RPO), which are up 36% year-over-year at $1.69 billion, reported The Motley Fool. RPO is the value of contracts Cloudflare has won but not yet completed, it is a good metric for future revenue growth. With a larger pipeline of contracts, Cloudflare appears well-situated to sustain its strong performance in the quarters ahead, according to the report. Since the company is rolling out more GPUs in its global network, its AI services are bound to draw more new customers, further establishing it as a leader in the AI cloud market, as per the report. Although Cloudflare's shares have skyrocketed in 2025, they have gotten more pricey. With a price of 34 times sales and a forward multiple of 200, it's no longer an "affordable" stock, according to The Motley Fool. That being said, Cloudflare has beaten Street estimates each of the last four quarters and has shown it can keep racking up strong numbers despite the elevated valuation. According to Goldman Sachs, the cloud infrastructure services global market, especially those aligned with GPUs targeting AI workloads, will balloon by 2030 to $580 billion. With Cloudflare set up to take advantage of this growth, the long-term growth trajectory for the business is enormous, as per the report. How has Cloudflare's financial performance been? Cloudflare saw a solid 2024 as its revenue grew 29% to $1.67 billion, according to the report. Its non-GAAP net income also improved 53%, settling at $0.75 a share, the Motley Fool reported. What's Cloudflare's AI strategy? Cloudflare's AI plan is centred on Workers AI, which is a cloud platform that enables businesses to execute AI models without the high cost of purchasing GPUs or setting up their own infrastructure, as per the report.

This Artificial Intelligence (AI) Cloud Stock Has Shot Up 55% in 2025. Can It Still Soar Higher?

Shares of Cloudflare (NET 0.16%) have shot up impressively so far this year, logging gains of 55% thanks to fast-growing demand for the company's artificial intelligence (AI)-focused offerings. The company, which is primarily known for its content delivery network (CDN) that secures internet connections along with improving the performance and reliability of websites and applications, has been deploying graphics processing units (GPUs) across its network over the past year and a half. These GPUs enable Cloudflare customers to run AI workloads in the cloud. The good news is that this move has been positively impacting the company's growth. The impact of AI on Cloudflare's growth was evident in the company's fourth-quarter 2024 results, which were released on Feb. 6 and led to an 18% spike in its stock price. Let's take a closer look at Cloudflare's latest quarterly report and check if the stock has the potential to sustain its impressive momentum. AI is encouraging Cloudflare customers to spend more on its platform Cloudflare finished 2024 with a 29% increase in revenue to $1.67 billion. Its non-GAAP net income shot up an impressive 53% to $0.75 per share. It is worth noting that Cloudflare's top and bottom lines exceeded its original guidance for 2024. In fact, its earnings grew at a much faster pace than the originally anticipated range of $0.58 to $0.59 per share. The robust growth in the company's earnings can be attributed to the higher customer spending on its services. For instance, the number of customers who have generated more than $100,000 in annualized revenue for Cloudflare jumped 27% in 2024, slightly higher than the 25% growth in its overall paying customer base. AI seems to be playing a central role in helping Cloudflare win a bigger share of its customers' wallets. Its Workers AI platform is an end-to-end solution that allows customers to run models in the cloud and build AI applications without having to invest in expensive infrastructure such as graphics cards. The company aims to "provide access to GPUs running on Cloudflare's massive global network to ensure AI inference can happen close to users for a low-latency end-user experience." More importantly, Cloudflare's global network spans 330 cities in 120 countries. As Cloudflare deploys GPUs across this broad network to roll out AI services to customers, there is a good chance that it could witness stronger deal activity in the future. In the previous quarter, Cloudflare saw an expansion in its existing deals with customers using its AI services. Management pointed out multiple instances of signing bigger contracts on the latest earnings conference call, saying Workers AI is witnessing solid traction among customers thanks to its low-cost nature. "The model of programming is uniquely suited for building tools like AI agents, and our serverless architecture, which allows you to pay only for what you use based on CPU or GPU type, positions Workers to become the go-to platform for developers who want the best price performance for AI inference and agentic workflows," CEO Matthew Prince said. The good part is that the bigger contracts are helping Cloudflare build a robust revenue pipeline. This is evident from the 36% year-over-year increase in its remaining performance obligations (RPO) last quarter to $1.69 billion. This metric refers to the total value of a company's contracts that are yet to be fulfilled. So, the faster growth in RPO as compared to Cloudflare's top-line growth last quarter suggests that it is signing more contracts than it is fulfilling right now. This should ideally lead to stronger top-line growth going forward, while the higher customer spending should result in improved unit economics. All this should set Cloudflare up for stronger growth in the future. Is the stock still worth buying? Cloudflare's impressive rally in 2025 has made the stock expensive. It is now trading at 34 times sales, while the forward earnings multiple of 200 is also quite rich. So, Cloudflare is definitely not in value territory. The only way Cloudflare can sustain its strong start to the year is by delivering better-than-expected results and raising its guidance in the coming quarters. That should help the company justify its expensive valuation. As it turns out, Cloudflare has indeed beaten Wall Street's expectations in each of the last four quarters. It won't be surprising to see that trend continue thanks to the company's fast-improving revenue pipeline on account of the growing adoption of its AI solutions. Moreover, the cloud infrastructure-as-a-service market that Cloudflare is targeting by offering GPU-based AI services is set to be massive in the long run, generating an estimated $580 billion in revenue in 2030 as per Goldman Sachs. So, Cloudflare seems built for solid long-term growth, which is why investors who may be willing to buy the company despite its expensive valuation could be rewarded with more upside going forward. Meanwhile, investors with a lower risk appetite would do well to add Cloudflare to their watch lists and look for potential dips to accumulate shares of this fast-growing cloud company.

1 AI Stock to Buy Ahead of a Breakout Year in 2025, According to a Wall Street Analyst | The Motley Fool

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. But Morgan Stanley analyst Hamza Fodderwala has outlined a bull-case scenario for the stock to advance by another 16% to $175 per share by year's end, and he may revise his forecast higher in light of its strong performance in the recent quarter. "We believe 2025 could be a breakout year for Cloudflare," Fodderwala wrote in a recent note. He supported that prediction by highlighting the convergence of several tailwinds for the company, including increased sales team productivity and the monetization of new artificial intelligence (AI) products. Here's what investors should know about Cloudflare. Cloudflare provides application, network, and security services that protect and accelerate IT infrastructure. It operates the fastest cloud network on the planet, and handles about 20% of all internet traffic. That affords Cloudflare deep insight into performance issues and security threats across the web, which continuously enhances its ability to route traffic quickly and safely. It reported strong results in the fourth quarter, beating Wall Street's expectations on the top and bottom lines. Its customer count increased by 25% to 237,714 -- marking its third straight quarter of acceleration in customer growth -- and its average established customer spent 11% more than a year prior. In turn, revenue climbed by 27% to $460 million, and non-GAAP net income increased by 27% to $0.19 per diluted share, a 2 percentage point acceleration from the previous quarter. Last year, Cloudflare hired former Palo Alto Networks President Mark Anderson to lead its sales organization. That personnel change was part of a broader effort to improve its go-to-market execution, and the company has made good progress. CEO Matthew Prince said on the fourth-quarter earnings call that sales productivity showed a double-digit percentage improvement for the fifth consecutive quarter. Prince also discussed the strong adoption of the company's Workers development platform, particularly for artificial intelligence use cases. He said Workers is positioned to "become the go-to platform for developers who want the best price performance for AI inference and agentic workflows." Edge clouds provide infrastructure services from the network edge -- in other words, from locations that are physically near their end users. Grand View Research estimates edge computing sales will grow at an annualized rate of 36% through 2030, driven by demand for edge AI services. Cloudflare began leaning into that opportunity in earnest with its launch of R2 Storage and Workers AI in 2023. R2 Storage lets developers cost efficiently store large amounts of data for training AI models. And Workers AI is an inference service, supported by Nvidia GPUs, that lets developers run AI applications on Cloudflare's network. Those products are compelling not only because Cloudflare has the fastest cloud network, but also because that network is agnostic, meaning 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. Likewise, International Data Corporation ranked Cloudflare as a segment leader in its latest report on edge delivery services, highlighting its focus on AI as a key strength. 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 times adjusted earnings looks expensive. But Wall Street may be underestimating the company's future growth. Cloudflare's earnings beat analysts' consensus estimates in the last six quarters by an average of 27%. If that pattern continues, the stock's current valuation may look more reasonable in hindsight. But investors should be careful chasing this stock at its current price. A more prudent course of action would be to add Cloudflare to your watch list and wait for opportunities to buy shares on dips.

Why Cloudflare Stock Is Skyrocketing Today | The Motley Fool

Cloudflare published its fourth-quarter earnings after the market closed yesterday and reported sales and earnings performance that beat Wall Street's expectations. Even better, the company laid out very strong guidance for the current quarter and fiscal year. With its Q4 report, Cloudflare recorded non-GAAP (adjusted) earnings per share of $0.19 on sales of $459.9 million. Meanwhile, the average analyst estimate had called for adjusted earnings of $0.18 per share on sales of roughly $452.1 million. Sales in the period were up 27% year over year, and the company closed out the period with a dollar-based net revenue retention (NRR) rate of 111% -- improving from a retention rate of 110% in the third quarter. NRR measures increased spending from customers already using the company's services. Outside of attracting new customers, increasing spending from existing clients is one of Cloudflare's key growth drivers. For the first quarter, Cloudflare guided for sales to come in between $468 million and $469 million. This target actually came in significantly below the average analyst estimate, which had called for sales of roughly $474.1 million. The company also guided for adjusted earnings per share of $0.16, falling short of the average Wall Street target's call for per-share earnings of $0.18. Looking further out, Cloudflare anticipates sales between $2.09 billion and $2.094 billion for the full-year period -- falling slightly short of the average analyst estimate's call for sales of $2.1 billion. Meanwhile, adjusted earnings per share are projected to come in between $0.79 and $0.80 -- again missing the average analyst forecast's call for per-share earnings of $0.85. But even with forecast shortfalls, commentary from management about the company's opportunities in artificial intelligence (AI) is powering huge valuation gains for the stock today. CEO Matthew Prince said that his company is seeing efficiency improvements in AI inference that are comparable to the big leaps forward in training efficiency recently reported by DeepSeek. While the two companies occupy very different places in the software industry, investors are betting that Cloudflare could be on the verge of major AI tailwinds.