AI is changing what internet traffic looks like. More API calls, more automated activity, more always-on applications, and more security risk riding alongside it.
That shift is pushing companies to rethink how they deliver and protect digital experiences at global scale.
The edge layer, where traffic gets routed, accelerated, and filtered before it hits core systems, is becoming a bigger strategic decision rather than a background utility.
Worth Watching (Sponsored)
A new research report highlights 5 stocks with the strongest potential to double in the year ahead.
Each was selected from thousands of companies and shows a rare mix of:
Strong fundamentals
Bullish technical setups
Past versions of this report delivered gains of +175%, +498%, and even +673%¹ — and the latest edition is free for a short time.
Available only until MIDNIGHT TONIGHT.
Download the free report
The Setup
Cloudflare (NYSE: NET) sits at the intersection of edge networking and cybersecurity.
Its platform helps companies make internet-facing applications faster, more reliable, and more secure by running traffic through a global network close to the end user.
The key near-term event is earnings. Cloudflare is scheduled to report fourth-quarter 2025 results after the market closes on Tuesday, February 10, 2026.
That report matters because it arrives when investors are already sensitive to two things: valuation multiples across software and the health of enterprise IT spending.
Recent analyst updates reflect that split view. BTIG upgraded the stock to Buy with a $199 target, while Jefferies cut its target to $185 from $225.
The upgrades and cuts are less about disagreement on the product and more about timing: how quickly Cloudflare can translate strong demand themes into consistent big-deal execution.
Cloudflare’s longer-term performance has been strong, but the last few months have been volatile.
That creates a classic setup where the business may be improving while the stock is trying to find a new equilibrium.
What The Company Actually Does
Cloudflare is often introduced as a content delivery network and DDoS protection provider. That still matters, but the platform is wider now.
The product strategy is to sit on the critical path of a customer’s traffic and then layer higher-value services on top.
1) Edge performance and reliability
Cloudflare routes and caches traffic through its global network to reduce latency and improve uptime.
If your application serves users around the world, performance is not just a nice-to-have. Slow load times hurt conversion, engagement, and retention.
Companies pay for speed when it reliably translates into business outcomes.
2) Security that runs inline with traffic
Because traffic flows through the network, Cloudflare can block malicious traffic, mitigate DDoS attacks, stop bot abuse, and protect APIs.
This is one reason the platform can be sticky. Once a company relies on a provider to filter and protect traffic in real time, switching costs can rise.
3) Zero Trust security and secure access
Cloudflare has been building a Zero Trust suite that shifts security away from the old perimeter model.
Instead of assuming anything inside a corporate network is safe, Zero Trust relies on identity, device posture, and policy controls to decide what access is allowed.
Demand here is supported by ongoing hybrid work patterns and the reality that applications and users are distributed.
4) The AI traffic angle
AI-driven applications tend to be more API-intensive, more automated, and more globally accessed. That pushes up the importance of routing, protecting, and optimizing traffic.
Even when AI workloads run on hyperscalers, the traffic still needs to move across the public internet and into enterprise environments safely.
Cloudflare wants to monetize this shift by being the default edge layer for performance and security and by offering additional services that help customers manage emerging AI-related risks.
Insider Account (Sponsored)
A former advisor to the CIA, the Pentagon and the White House just released…
This shocking new expose of Trump’s plans for 2026.
Every American patriot deserves to see this…
Because if this man is right…
2026 could not only be a milestone for America…
But it could also be the biggest wealth building year of your life.
Click here to see the details because something huge is happening in May.
Why The Stock Has Been Choppy
There are three main reasons.
1) Large enterprise deals can be unpredictable
Cloudflare is pushing further upmarket. Bigger customers bring bigger contract potential, but they can also bring longer procurement cycles, more legal review, and more budget scrutiny.
When the market worries about enterprise spending, it tends to focus on large deal timing because it is often the swing factor in quarterly results.
2) The valuation debate never really goes away
Cloudflare is a growth platform with a premium profile. Even after pullbacks, it can still trade at levels that assume sustained high growth.
When investors get cautious, they compress multiples quickly and then demand cleaner execution before re-expanding valuation.
3) Investment intensity is part of the strategy
Cloudflare continues to invest heavily in network capacity, product development, and go-to-market. That can create short-term margin pressure.
Investors who want near-term profitability acceleration can become impatient, even if those investments increase long-term platform strength.
Want to make sure you never miss a stock recommendation?
Elite Trade Club now offers text alerts — so you get trending stocks and market-moving news sent straight to your phone before the bell. Email’s great. Texts are faster.
The Bull Case
1) Edge networking and security are increasingly bundled decisions
Companies want fewer vendors where possible, especially when the services operate in the same part of the stack.
If Cloudflare can deliver strong performance and strong security through the same network, the platform value rises.
That bundling dynamic can support higher retention and higher wallet share over time.
2) Zero Trust is a durable multi-year trend
Security buyers are not treating Zero Trust like a temporary project. It is becoming an architectural shift driven by distributed workforces, cloud migration, and rising breach risk.
The win for Cloudflare is not just landing a customer. It is expanding usage across teams, geographies, and applications.
3) AI increases the importance of traffic control and risk management
As AI increases automated traffic and creates new attack surfaces, enterprises need more visibility and control.
The edge is a natural place to enforce policy, limit abuse, and protect APIs.
If Cloudflare becomes the layer customers rely on for these functions, it can turn the AI trend into a monetization tailwind rather than just higher traffic volume.
4) The stock can re-rate before the news feels perfect
When sentiment gets too negative, the bar for a positive surprise drops.
If Cloudflare reports steady fundamentals and provides guidance that suggests demand is intact, the stock can recover even if growth is not accelerating.
The key is credibility. Investors want to see that deal delays are not turning into deal losses.
Hidden Asset (Sponsored)
Everyone's talking about AI stocks but almost no one is talking about what AI actually runs on.
Nickel. Copper. Cobalt. Manganese.
America just secured exclusive rights to the largest untapped supply on Earth.
One company is already in position and this could be one of the most important AI infrastructure plays heading into 2026.
The name and ticker are available here now
The Bear Case
1) Deal timing risk can persist longer than investors want
If large deals keep taking longer and management commentary stays cautious, the stock may struggle to regain momentum.
Growth investors are often willing to forgive one messy quarter. They are less forgiving when uncertainty becomes a pattern.
2) Competition can pressure pricing and retention
Cloudflare operates in markets with formidable competitors. Some are network-focused, some are security-focused, and some bundle services through hyperscaler ecosystems.
Winning long term requires clear differentiation on performance, product breadth, ease of deployment, and total cost of ownership.
3) Premium expectations can punish small stumbles
High-growth platform stocks can move sharply on minor changes in guidance. Even if the long-term story is intact, short-term market reactions can be severe if the quarter is not clean.
What I’d Watch Next
If you are tracking this name into earnings and beyond, focus on a small set of signals.
Enterprise momentum: Are large customers expanding usage, and is the company still landing meaningful new enterprise wins?
Zero Trust adoption: Is it growing steadily and attaching to existing performance customers, or is it slowing because budgets are tight?
Net retention and platform expansion: Is Cloudflare increasing wallet share per customer, which is a key sign the platform strategy is working?
Guidance tone: Does management sound confident about demand and pipelines, or does it suggest customers are pausing decisions?
Margin direction over time: Not quarter-to-quarter noise, but whether scale benefits are starting to emerge as the platform grows.
My Take
This setup is about a company with strong long-term positioning moving through a period where the market is hyper-focused on near-term enterprise deal timing.
Cloudflare sits in a part of the stack that matters more as internet traffic grows more complex and more security-sensitive.
If the company can keep proving that demand is there and that customers are expanding into multiple products, the long-term case remains compelling.
The clean bull path is straightforward: stable enterprise demand, steady Zero Trust adoption, improving platform expansion, and enough operational discipline to show that scale can translate into better profitability over time.
The main risk is that large deal cycles stay sluggish and keep investors in wait-and-see mode, which can cap upside even if the business keeps progressing.
For this edition, the key is not whether Cloudflare is building a strong platform.
It is whether the upcoming earnings report confirms that the platform is still converting demand into durable revenue growth in an enterprise environment that is becoming more selective.
That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.
Best Regards,
— Adam Garcia
Elite Trade Club
Click here to get our daily newsletter straight to your cell for free.
P.S. Just like this newsletter, it's 100% free*, and you can stop at any time by replying STOP.
