Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 11 May, 26 | NET | Buy | USD 193.5 | USD 205.0 | USD 213.0 | 10 days | Closed |
10.46%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
CloudFlare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company provides 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; and website and application security products comprising web application firewall, bot management, distributed denial of service, API gateways, SSL/TLS encryption, secure origin connection, and rate limiting products. It also offers website and application performance solutions, including content delivery, load balancing, DNS, agro smart routing, video stream delivery, content optimization, virtual backbone, always online, and cloudflare waiting room and registrar; and network services, which deliver network connectivity, security, and performance to customers as a service, including WAN, WARP, magic transit, magic firewall, cloudflare network interconnect, and spectrum. In addition, the company provides zero trust services, such as cloudflare access, cloudflare gateway, remote browser isolation, cloud access security broker, cloudflare area 1 email security, and data loss prevention products that protect, inspect, and privilege data. Further, it provides developer-based solutions consisting of cloudflare workers, pages, stream, and images, as well as Cloudflare Data Localization suite, a tool that set rules and controls at the network edge; durable objects and R2 object storage products; 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.
Expansion in Free Cash Flow: USD 84.1 Mn in Q1FY26 vs USD 52.9 Mn in Q1FY25
Increase in Revenue: USD 639.8 Mn in Q1FY26 vs USD 479.1 Mn in Q1FY25
Increase in Research and Development Expenses: USD 151.0 Mn in Q1FY26 vs USD 115.1 Mn in Q1FY25
Increase in Cost of Revenue: USD 184.2 Mn in Q1FY26 vs USD 115.6 Mn in Q1FY25
Cloudflare remains exposed to risks associated with intense competition in cloud networking and cybersecurity, AI infrastructure monetization uncertainty, margin pressure from expanding developer workloads, and execution risks related to its large-scale AI-driven organizational restructuring
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 193.5 | 175.0 | 205.0 | 213.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
AI-Led Transformation and Revenue Acceleration: Cloudflare, Inc. delivered a strong start to Q1FY26, supported by accelerating AI-driven demand and continued adoption of its connectivity cloud platform. Revenue increased 34% year-over-year to USD 639.8 million, driven by robust growth across application services, Zero Trust solutions, and developer products. The company also highlighted that AI is driving a major re-platforming of the Internet, positioning Cloudflare as a key infrastructure enabler for agentic AI workloads and modern application architectures.
Enterprise Customer Expansion and Large Deal Momentum: The company demonstrated solid enterprise traction during the quarter, with customers contributing over USD 100,000 annually increasing 25% year-over-year to 4,416. Revenue contribution from these large customers rose to 72% of total revenue from 69% in the prior-year quarter. Cloudflare also reported that deals above USD 1 million increased 73% year-over-year, while the number of customers spending over USD 5 million annually reached a record level, highlighting expanding adoption among large enterprises.
AI Platform Adoption Strengthens Operational Positioning: Cloudflare experienced rapid adoption of its Workers developer platform and AI-related solutions during Q1FY26. The company added approximately 1 million developers during the quarter, taking the total developer count to more than 5.5 million. Management noted significant demand from AI-focused enterprises leveraging Dynamic Workers, AI Gateway, and edge infrastructure solutions to support low-latency inference and agentic workflows, reinforcing Cloudflare’s strategic positioning in AI infrastructure.
Operational Efficiency and Profitability Improvements: Despite continued investments in growth and AI capabilities, Cloudflare maintained solid profitability metrics. Non-GAAP operating income increased to USD 73.1 million from USD 56.0 million in Q1FY25, while free cash flow improved to USD 84.1 million from USD 52.9 million. The company also achieved sales productivity improvements for the ninth consecutive quarter, supported by stronger quota-carrying sales force productivity and increasing operational leverage across the business.
Strategic AI-First Organizational Restructuring: During the quarter, Cloudflare announced a significant operational restructuring aimed at transitioning toward an agentic AI-first operating model. The company plans to reduce its workforce by approximately 1,100 employees, or nearly 20% of total headcount, while continuing to expand quota-carrying sales capacity. Management indicated that the restructuring is intended to improve long-term productivity, operational agility, and scalability as AI-driven automation increasingly transforms internal workflows and software development processes.
Margin Dynamics and Infrastructure Scalability: Cloudflare’s gross margin moderated during Q1FY26 due to increasing adoption of developer platform products and a higher mix of paid traffic on its network. Non-GAAP gross margin declined to 72.8% from 77.1% in Q1FY25. However, management emphasized that improving GPU utilization, infrastructure efficiency, and higher monetization of AI workloads are expected to support long-term operating leverage. The company also highlighted its differentiated architecture compared to traditional hyperscalers, enabling efficient scaling of inference workloads.
Strong Outlook Supported by AI and Security Demand: Management maintained a constructive outlook for FY26, projecting full-year revenue between USD 2.805 billion and USD 2.813 billion, representing approximately 30% year-over-year growth at the midpoint. Cloudflare also expects non-GAAP operating income between USD 418 million and USD 421 million. The company continues to benefit from rising demand for Zero Trust security, developer tools, edge computing, and AI-driven traffic growth, which management believes will remain key structural growth drivers over the coming years.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Cloudflare, Inc. (NYSE: NET) at the current market price of USD 193.5, as on 11 May,2025 at 10:39 am PDT
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Software - Infrastructure
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| NET Cloudflare Inc |
-5.24 1.89% | 272.42 | - | 153.85 | 23.00 | 39.77 | 22.88 | -446.4734 |
| MSFT Microsoft Corporation |
8.47 2.15% | 402.29 | 37.32 | 29.94 | 13.03 | 12.45 | 13.06 | 24.59 |
| ORCL Oracle Corporation |
-5.03 3.98% | 121.38 | 29.34 | 18.66 | 5.55 | 74.06 | 7.10 | 18.13 |
| CRWD Crowdstrike Holdings Inc |
-4.59 2.26% | 198.49 | - | 89.29 | 23.70 | 24.81 | 21.91 | 577.82 |
| PANW Palo Alto Networks Inc |
-10.02 2.79% | 348.66 | 44.57 | 45.05 | 11.98 | 20.70 | 11.82 | 77.11 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on May 11, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
Copyright © 2026 Krish Capital Pty Ltd. All rights reserved. No part of this website, or its content, may be reproduced in any form without our prior consent.
Australia