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Cloudflare: Still No AI Boost Detected

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Update - Nov. 18, 2025

Cloudflare could roundtrip all the way back down to $120. The stock still trades at 26x '26 sales targets despite causing this major outage today. 

-Update: Cloudflare said it was starting to see some services recover, but “customers may continue to observe higher-than-normal error rates as we continue remediation efforts.”

-Cloudflare (NET) shares slid 3.9% in premarket trading on Tuesday as a major outage at the internet security company has disrupted major apps, including X, ChatGPT and others.

“Cloudflare is aware of, and investigating an issue which impacts multiple customers: Widespread 500 errors, Cloudflare Dashboard and API also failing,” the company said in a post on its systems status page. “We are working to understand the full impact and mitigate this problem. More updates to follow shortly.”

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Original article posted on Oct. 16. 

  • Cloudflare is overvalued, with its stock price far outpacing actual revenue growth despite strong AI-related market enthusiasm.
  • NET's revenue growth has decelerated from 42% to 28% over three years, while true AI leaders have seen much faster acceleration.
  • Consensus estimates for NET's future revenues have been cut, yet the stock trades at extreme valuation multiples of 31x 2026 sales targets, pricing in unrealistic growth.
  • Investors should use the current elevated stock price to lock in profits, as a major valuation reset is likely ahead for the stock.
Cloudflare, Inc. (NET) remains a perplexing AI cloud play with the business not showing the ability to boost growth during surging AI demand. The company has constantly maintained strong growth in the upper 20% range, but growth hasn't accelerated and doesn't appear headed in that direction. My investment thesis remains ultra Bearish on the stock as the ongoing rally prices in a lot of accelerating growth not in the cards.


Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details. 

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