Cloudflare

NET

Market cap $63.7B

Cyber security concerns are on the rise as the conflict in the Middle East drags in more US allies. Cynthia Kaiser, senior vice president of the Ransomware Research Center at Halcyon and former deputy director of the FBI's Cyber Division, discusses the risks with Caroline Hyde on “Bloomberg Tech."

Cloudflare (NET) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.

Anthropic announced new AI tools that connect with Salesforce-owned Slack, Intuit, Docusign, LegalZoom, FactSet and Google's Gmail. Cybersecurity and software names have sold off heavily in recent weeks as investors fretted about potential disruption from artificial intelligence.

Software stocks have dropped into bear market territory, but Wall Street analysts generally think Microsoft and Cloudflare are undervalued. Microsoft is monetizing AI across its software and cloud computing businesses, and Wall Street's median target price implies 52% upside Cloudflare is well positioned to benefit from the proliferation of AI agents, and Wall Street's median target price implies 40% upside.

Cybersecurity stocks dropped for a second day as the threat of AI to the industry loomed large with Anthropic's latest AI tool that can scan code for vulnerabilities. Investors are worried these new tools will displace software business models and many tasks handled by cybersecurity vendors.

SAN FRANCISCO--(BUSINESS WIRE)--Cloudflare, Inc. (NYSE: NET), the leading connectivity cloud company, today announced it has achieved a major milestone by delivering the world's first complete Secure Access Service Edge (SASE) to support modern post-quantum (PQ) encryption standards. By integrating advanced post-quantum encryption across all its major network configurations, the Cloudflare One SASE platform now provides the most secure bridge between corporate environments and its global networ.

Cloudflare's new partnership gives it a fast path into small businesses and critical infrastructure that desperately need affordable cybersecurity. Cloudflare is becoming core internet infrastructure, and deals like this strengthen Cloudflare's long-term moat.

Shares of most of the cybersecurity companies Jefferies covers are trading at the lowest valuations seen over the past five years.

Cloudflare delivered robust Q4 results, with revenue growth continuing to accelerate. NET's go-to-market transition is gaining traction, evidenced by record large customer additions and the highest quota attainment by the sales team in four years. NET is well positioned to benefit from AI and edge compute tailwinds, with its infrastructure-heavy business model mitigating AI disruption risks.

Cloudflare is at the epicenter of AI-driven growth. While other software companies are under pressure, Cloudflare is exceeding expectations and even accelerating. Valuation is demanding, but Cloudflare has both the financial performance and growth prospects to justify it.