Cloudflare Shares Surge 18% as AI Agents Rewrite Internet Traffic Patterns, Revenue Jumps 36%

Cloudflare shares jump after forecast raise on AI-driven demand

Aug 7 (Reuters) - Cloudflare (NET.N), opens new tab shares rose before the bell on Friday after the cloud services firm raised its annual forecasts, betting that resilient AI-driven demand will sustain traffic across its network. Quarterly results of Cloudflare, whose shares were last up 16.2% at $330.51, follow Amazon.com's (AMZN.O), opens new tab strongest cloud growth in more than four years. Amazon noted that it won't have enough capacity to meet all demand in 2026. The two reports underscore that software companies remain key winners of ⁠the ongoing scramble to build AI infrastructure. Cloudflare now expects full-year revenue of $2.86 billion to $2.87 billion, up from its prior expectation of $2.805 billion to $2.813 billion. The new forecast, released after markets closed on Thursday, exceeds analysts' average estimate of $2.81 billion, according to LSEG-compiled data. Analysts at Morgan Stanley said the company's Workers developer platform was its fastest-growing segment, amid a shift toward a usage-based model, expecting the company to exceed its ⁠outlook. Cloudflare's also increased its adjusted per share earnings forecast to a range of $1.25 to $1.26 from its earlier estimate of $1.19 to $1.20. Analysts also highlight that Cloudflare stands to benefit as cybersecurity becomes more necessary as cutting-edge AI models reshape ⁠the cyber-risk landscape. Cloudflare shares have gained over 44% so far this year, compared with a near-77% rise in rival CrowdStrike (CRWD.O), opens new tab and a 95% jump in ⁠Palo Alto Networks (PANW.O), opens new tab. The stock trades at over 190 times its forward price-to-earnings ratio, compared with over 145 for CrowdStrike, according to ⁠LSEG-compiled data. The company, analysts at RBC Capital Markets note, "has multiple, durable avenues to AI-monetization over the long-to-medium term that warrants a premium valuation." Reporting by Purvi Agarwal in Bengaluru; Editing by Joyjeet Das Our Standards: The Thomson Reuters Trust Principles., opens new tab

Cloudflare raises annual outlook above market estimates on AI-driven demand

Aug 6 (Reuters) - Cloudflare (NET.N), opens new tab raised its full-year revenue forecast above Wall Street expectations after strong quarterly results, betting that the rapid rise of AI agents will keep driving traffic across its network, sending its shares up 18% after the bell. The race to build and scale AI agents has led more businesses to rely ⁠on Cloudflare's network to safely route traffic and run those tools, boosting demand for its cloud and security products. Here are more details: Reporting by Nithyashree R B in Bengaluru; Editing by Diti Pujara Our Standards: The Thomson Reuters Trust Principles., opens new tab

Cloudflare shares jump 18% on revenue beat and raised full-year outlook

Shares in Cloudflare Inc. were up more than 18% in late trading today after the content delivery network and security company beat second-quarter estimates and raised its full-year forecast. For the quarter that ended on June 30, Cloudflare reported adjusted earnings per share of 29 cents, up from 21 cents in the same quarter of 2025, on revenue of $696.1 million, up 36% year-over-year. Analysts had been expecting 27 cents per share and revenue of $664.8 million. Sitting underneath the beat was a large one-time cost. Cloudflare booked $150.7 million in restructuring and other charges in the quarter, tied to the 1,100 job cuts it announced in May. That is slightly above the $140 million to $150 million it had estimated for the whole plan. The charge widened the company's unadjusted net loss to $170 million, or 48 cents a share, from $50.4 million, or 15 cents, a year earlier. Adjusted net income, which strips out the restructuring and stock-based compensation, came in at $107.8 million. Adjusted income from operations was $96.1 million, or 13.8% of revenue, a slightly thinner margin than the 14.1% Cloudflare managed a year ago. Free cash flow reached $56.4 million, up from $33.3 million. The company closed the quarter with $4.16 billion in cash, cash equivalents and available-for-sale securities. Large customers, those generating more than $100,000 in annualized revenue, numbered 4,698 at the end of June, up 27% year-over-year. That cohort now produces 73% of revenue. Dollar-based net retention climbed to 120%, from 114% a year earlier and 118% in the March quarter. Current remaining performance obligations, a measure of contracted revenue due within a year, grew 35%. Cloudflare no longer breaks out a total paying customer count, though co-founder and Chief Executive Matthew Prince said the quarter brought record growth in that number. "We delivered a stellar second quarter, highlighted by revenue accelerating to $696.1 million, up 36% year-over-year," Prince said in the company's earnings release. He argued that the shift to AI answer engines and agent-driven commerce amounts to "a fundamental rewrite of the Internet for machine-to-machine traffic," with Cloudflare building the infrastructure, controls, developer tools and payment rails for it. Guidance is where the quarter did the most work. For the third quarter, Cloudflare put revenue at $736 million to $737 million. Analysts had been closer to $721 million. Adjusted earnings should land at 34 cents a share, the company said. The full-year number moved too. Cloudflare now sees revenue of $2.86 billion to $2.87 billion, up from the $2.81 billion it guided to in May, and adjusted earnings of $1.25 to $1.26 a share. That is a sharp reversal from May. Cloudflare shares fell more than 16% after the first quarter. The earnings beat that quarter got buried under light guidance and word that 20% of staff would go. Prince called the cuts a re-architecture of the company around what it calls an agentic AI-first operating model. Investors were not convinced. The cuts are landing. Cloudflare counted 4,700 employees at the end of June, down from 5,483 three months earlier. The remainder is due by the end of the third quarter. Product activity in the quarter leaned heavily on the same theme. Cloudflare expanded its Agent Cloud offering in April with tools for moving agents into production workloads, and it launched Mesh, a global private networking service built to deploy and govern those agents. A "your content, your rules" framework followed, giving site owners control over how AI models use their material, with GoDaddy Inc. signed up to help push the standards. Newsletter platform beehiiv Inc. switched on Cloudflare's AI Crawl Control for its writers in June. The company bought VoidZero Inc., the open-source outfit behind the Vite JavaScript toolchain, in June. Partnerships announced during the quarter included one with Anthropic PBC to pair Claude models with Cloudflare's network and Workers platform and another with Google LLC's Wiz unit covering shadow AI exposure. Adjusted operating margin has now narrowed year-over-year for two straight quarters, to 13.8% from 14.1% in the second quarter and to 11.4% from 11.7% in the first, even as revenue growth accelerated. The full-year guidance points the other way. It implies an adjusted operating margin of about 15.5%, against 14% in 2025.

AI agents are quietly rewriting how the internet works

For years, Cloudflare (NET) was easy to explain. It helped websites load faster, blocked cyberattacks, and kept internet traffic moving. In the era of artificial intelligence, that description sounds outdated. Cloudflare's second-quarter revenue climbed 36% year over year to $696.1 million, while large customers paying more than $100,000 annually increased to 4,698, up roughly 27% from a year earlier. The company also raised its full-year revenue outlook to between $2.864 billion and $2.87 billion, helping send shares sharply higher after earnings. The greater story is why. The internet is starting to move away from humans browsing and toward machine-to-machine activity from autonomous AI bots, according to Cloudflare. Such agents crawl websites, question APIs, retrieve information, and increasingly make transactions without a human manually browsing through pages. That alters the infrastructure the internet needs. More automated traffic means more demand for routing, security, identification, payments, and developer tools tailored for software working with software. For investors, that presents a broader AI thesis for Cloudflare than just "more companies are buying cloud services." The corporation may be turning into one of the toll collectors for ever-increasing machine-to-machine communication on the internet. "As the web shifts to AI answer engines and agent-driven commerce, we are seeing a fundamental rewrite of the Internet for machine-to-machine traffic," CEO Matthew Prince said. "Cloudflare sits at the center of this paradigm shift." Cloudflare is benefiting from an internet with fewer humans in the loop Cloudflare's own traffic analytics demonstrate how swiftly that transition is happening. The company says that for the first time more than half of internet traffic is non-human, and 52% of crawler requests connected to AI training as of June 2026, up from 22% in spring 2025. Another 36% of the crawler traffic comes from mixed-use crawlers that combine search with agent activity and training. That's a big shift in how people are using online infrastructure. The traditional online traffic usually followed a simple path: a person would open a browser, seek information, and click into a website. AI agents are another story. They might scrape many websites, retrieve data from APIs, compare costs, summarize outcomes, or even make purchases for customers. That might mean a whole lot more automated queries without the commensurate rise in good old human visits. Cloudflare sits in the middle of those requests because its network already handles traffic for a significant portion of the web. The company says more than 20% of websites lie behind its network. That gives a unique leg-up. AI might produce more traffic and increase Cloudflare revenue and also provide tools to regulate which agents get access and how they act. Already the company is moving beyond simple traffic control. Cloudflare has introduced identification and wallet tools aimed at autonomous agents. The method allows companies to verify who approved an AI agent and gives those agents limited spending power for online purchases. This takes Cloudflare further into the commercial layer of the agentic internet. It's not only about protecting websites from bots; it's about helping differentiate real AI assistants from dangerous automated traffic. That may become more crucial as agents go from reading information to actually purchasing things and services. Cloudflare's developer growth may be the most important earnings signal The second-quarter profit beat was substantial. One operating metric, however, may be more important over time. Cloudflare added over 2 million developers in the quarter alone, compared with 1.5 million in all of the previous year, Reuters said. The Workers platform is the company's fastest-growing division as expenditure on a use basis is accelerating, Morgan Stanley analysts said. Developers are important because they decide where future AI applications are implemented. Cloudflare Workers allows you to run applications directly across Cloudflare's worldwide network, rather than depending exclusively on traditional centralized cloud infrastructure. That architecture becomes more attractive when AI applications require low-latency access to consumers, APIs, and data. The company's enormous consumer numbers reflect the trend. Cloudflare closed the quarter with 4,698 customers spending $100,000 or more a year, up around 27% year-over-year. Revenue from larger customers has become an increasingly essential part of the business. At the same time, the security challenge is growing. That opens up another possible development avenue for Cloudflare with bot management, application security and identity restrictions. Thus, AI might create more traffic for Cloudflare to carry and new risks for Cloudflare to fight against. Bloomberg / Getty Images Cloudflare investors are paying heavily for the agentic internet It's a massive opportunity. The valuation is too high. By Aug. 7, shares of Cloudflare had risen more than 44% in 2026, and the stock traded at more than 190 times anticipated earnings, versus 145 times for CrowdStrike, Reuters reported. That means investors are already factoring in big future growth. The most recent results help support some of that optimism. Second-quarter revenue grew 36%, current remaining performance obligations increased 35%, and free cash flow rose to $56.4 million from $33.3 million a year earlier. Cloudflare also raised its full-year adjusted earnings-per-share forecast to $1.25 to $1.26 from $1.19 to $1.20. But the company still posted a GAAP operating loss of $205.7 million, or nearly 30% of revenue. That sets up a familiar growth-stock conundrum for investors. Cloudflare might be at the heart of one of the biggest architectural revolutions on the internet. It also has to grow fast enough to warrant one of the sector's biggest multiples. What Cloudflare investors should watch next * Developer growth: The 2 million developers added in Q2 suggest Workers is becoming a meaningful AI platform. * Large customers: Continued 20%-plus growth would support the enterprise expansion thesis. * Agent traffic: More machine-to-machine activity could increase demand for routing, security and identity tools. * Security monetization: AI agents create new attack surfaces that Cloudflare may be able to monetize. * Margins: Revenue growth matters less if GAAP losses remain elevated. * Valuation: At more than 190 times forward earnings, even strong execution may already be reflected in the stock. Cloudflare's quarter so far reflects more than a typical profit beat. The internet is transforming. For decades, websites were developed with a focus on users who clicked on links. Now software agents increasingly search, retrieve, evaluate, and transact on behalf of those individuals. Cloudflare is betting all those automated interactions will demand infrastructure underlying them. If that occurs, the corporation is not only keeping the old internet alive. Maybe it's helping build the next one. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc. This story was originally published August 10, 2026 at 7:07 AM.

Cloudflare shares jump after forecast raise on AI-driven demand

Cloudflare shares rose before the bell on Friday after the cloud services firm raised its annual forecasts, betting that resilient AI-driven demand will sustain traffic across its network. Quarterly results of Cloudflare, whose shares were last up 16.2per cent at $330.51, follow Amazon.com's strongest cloud growth in more than four years. Amazon noted that it won't have enough capacity to meet all demand in 2026. The two reports underscore that software companies remain key winners of the ongoing scramble to build AI infrastructure. * Latest technology news on BNNBloomberg.ca Cloudflare now expects full-year revenue of $2.86 billion to $2.87 billion, up from its prior expectation of $2.805 billion to $2.813 billion. The new forecast, released after markets closed on Thursday, exceeds analysts' average estimate of $2.81 billion, according to LSEG-compiled data. Analysts at Morgan Stanley said the company's Workers developer platform was its fastest-growing segment, amid a shift toward a usage-based model, expecting the company to exceed its outlook. Cloudflare's also increased its adjusted per share earnings forecast to a range of $1.25 to $1.26 from its earlier estimate of $1.19 to $1.20. Analysts also highlight that Cloudflare stands to benefit as cybersecurity becomes more necessary as cutting-edge AI models reshape the cyber-risk landscape. Cloudflare shares have gained over 44per cent so far this year, compared with a near-77per cent rise in rival CrowdStrike and a 95per cent jump in Palo Alto Networks. The stock trades at over 190 times its forward price-to-earnings ratio, compared with over 145 for CrowdStrike, according to LSEG-compiled data. The company, analysts at RBC Capital Markets note, "has multiple, durable avenues to AI-monetization over the long-to-medium term that warrants a premium valuation."

Cloudflare raises annual outlook above market estimates on AI-driven demand

Aug 6 (Reuters) - Cloudflare raised its full-year revenue forecast above Wall Street expectations after strong quarterly results, betting that the rapid rise of AI agents will keep driving traffic across its network, sending its shares up 18% after the bell. The race to build and scale AI agents has led more businesses to rely on Cloudflare's network to safely route traffic and run those tools, boosting demand for its cloud and security products. Here are more details: o Cloudflare raised its annual revenue forecast to a range of $2.86 billion to $2.87 billion, from $2.805 billion to $2.813 billion previously, and above analysts' average estimate of $2.81 billion, according to LSEG-compiled data. o The cloud services provider reported a revenue of $696.1 million for the second quarter ended June 30, above analysts' estimate of $665.5 million. o It forecast third-quarter revenue between $736 million and $737 million, also higher than estimates of $722.1 million. o Second-quarter adjusted earnings came in at $0.29 per share, above expectations of $0.27 per share. o Cloudflare also raised its annual adjusted earnings guidance to $1.25 to $1.26 per share, from $1.19 to $1.20 per share previously. o In May, Cloudflare announced it would cut roughly 20% of its workforce, more than 1,100 jobs, as part of AI-led restructuring. (Reporting by Nithyashree R B in Bengaluru; Editing by Diti Pujara)