Cloudflare (NET) Stock Surges 16% as AI Boom Powers Earnings Beat

TLDR

• Cloudflare posted Q4 2025 revenue of $614.5 million, up 34% year-over-year, beating analyst estimates of $591.3 million
• Earnings per share reached $0.28, topping forecasts of $0.27, while gross margin hit 74.9% with operating income of $89.6 million
• Q1 2026 revenue guidance of $620-$621 million exceeded consensus of $614 million, though EPS guidance of $0.23 fell short of $0.25 estimates
• Full-year 2026 revenue outlook of $2.785-$2.795 billion beat Wall Street’s $2.74 billion target as AI demand accelerates
• Stock surged 16% in premarket trading as customer base grew to 4,298 accounts paying over $100,000 annually

Cloudflare shares jumped nearly 16% in premarket trading Wednesday after the company delivered Q4 2025 results that crushed Wall Street expectations.

Revenue for the quarter ended December 31 climbed 34% year-over-year to $614.5 million. Analysts had expected $591.3 million.

The company earned $0.28 per share, beating the $0.27 consensus estimate. The results sent the stock up 3.55% in aftermarket trading to $179.50.

Cloudflare, Inc., NET

Cloudflare reported a gross margin of 74.9% for the quarter. Operating income totaled $89.6 million, delivering a 14.6% operating margin.

Free cash flow reached $99.4 million, representing 16% of total revenue. The strong metrics reflect growing demand for cloud infrastructure services.

AI Demand Fuels Revenue Growth

The integration of AI across industries is driving increased demand for Cloudflare’s services. The company’s global network enables businesses to run AI applications with better performance and security.

CEO Matthew Prince noted that AI and automated agents are reshaping internet infrastructure. This shift is creating new opportunities for Cloudflare’s platform.

The company benefits from AI agent adoption, including tools like “OpenClaw.” These applications rely on Cloudflare’s technology to manage secure connections without exposing networks to risks.

Cloudflare now counts 4,298 customers paying over $100,000 per year. This high-value customer segment expanded 23% year-over-year.

Guidance Tops Wall Street Forecasts

Cloudflare expects Q1 2026 revenue between $620 million and $621 million. That beats the $614 million analyst consensus, representing 29-30% growth.

The company guided for adjusted earnings of $0.23 per share in Q1. That fell slightly below Wall Street’s $0.25 estimate.

For the full year 2026, Cloudflare projects revenue of $2.785 billion to $2.795 billion. The midpoint exceeds analyst expectations of $2.74 billion.

Operating income for 2026 is expected to reach $378-$382 million. The outlook reflects confidence in the company’s market position.

Analyst Ratings

TipRanks shows NET stock carries a Moderate Buy consensus rating. The rating includes 12 Buy recommendations, five Hold ratings, and one Sell rating.

The average analyst price target stands at $225.67. That implies 25.4% upside from current trading levels.

The company’s expanding customer base and strong margins support positive analyst sentiment. AI-driven demand continues to strengthen the growth outlook for cloud infrastructure providers.

The post Cloudflare (NET) Stock Surges 16% as AI Boom Powers Earnings Beat appeared first on Blockonomi.