NET Should I Buy
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Cloudflare Inc (NET) is a good buy for a beginner investor with a long-term strategy and $50,000-$100,000 available for investment. The company's strong Q4 performance, accelerating revenue growth driven by AI adoption, and favorable analyst ratings make it a compelling investment opportunity despite some minor financial setbacks. The technical indicators and options data also support a positive sentiment for the stock.
The MACD is positive and expanding, indicating bullish momentum. RSI is neutral at 58.876, suggesting no overbought or oversold conditions. Moving averages are converging, showing a potential for a breakout. Key support is at 163.512, and resistance levels are at 196.57 and 206.782, with the stock trading near the pivot point of 180.041.
Q4 revenue growth of 34% YoY, driven by AI adoption.
Record annual contract value and accelerating performance obligations.
Analysts have raised price targets, with many maintaining Buy ratings.
Strong demand for AI infrastructure across product categories.
Stock rose 10% after exceeding earnings expectations.
Net income dropped by 6% YoY, and EPS declined by 25% YoY.
Gross margin decreased by 3.57% YoY, indicating higher costs.
Some analysts express concerns about valuation and potential slowing of future revenue growth.
In Q4 2025, Cloudflare's revenue increased by 33.6% YoY to $614.5 million, driven by strong AI adoption. However, net income dropped to -$12.08 million (-6% YoY), and EPS declined to -$0.03 (-25% YoY). Gross margin also fell slightly to 73.64% (-3.57% YoY). Despite these setbacks, the company closed its largest annual contract and showed strong growth in key metrics.
Analysts are overwhelmingly positive, with multiple firms raising price targets (e.g., Citi to $265, BTIG to $243, and Baird to $260). The consensus highlights robust Q4 results, accelerating revenue growth, and strong demand for AI-driven solutions. Some analysts, however, remain cautious about valuation, with Guggenheim maintaining a Sell rating and Piper Sandler a Neutral rating.
