Cloudflare stock jumps 16% as AI demand drives higher 2026 revenue forecast

Cloudflare shares NET surged in premarket trading on Friday after the cloud services company raised its full-year revenue and earnings forecasts, signaling continued strength in demand for artificial intelligence infrastructure and cybersecurity services.

The stock rose more than 16% before the opening bell after the company lifted its fiscal 2026 outlook following second-quarter results.

The upbeat guidance came shortly after Amazon reported its strongest cloud growth in more than four years while warning that demand for cloud capacity is expected to outstrip supply in 2026, reinforcing investor optimism around AI infrastructure spending.

Cloudflare now expects full-year revenue between $2.86 billion and $2.87 billion, up from its previous forecast of $2.805 billion to $2.813 billion.

The updated outlook is also ahead of analysts' consensus estimate of $2.81 billion, according to LSEG data.

The company also increased its adjusted earnings forecast to between $1.25 and $1.26 per share from its earlier outlook of $1.19 to $1.20. Wall Street had expected fiscal 2026 earnings of about $1.20 per share.

AI platform growth boosts outlook

Analysts pointed to Cloudflare's growing exposure to AI infrastructure as a key driver behind the stronger guidance.

Morgan Stanley said the company's Workers developer platform was its fastest-growing business, benefiting from a shift toward a usage-based model.

Morningstar also described Cloudflare as a "compelling picks-and-shovels play" on AI adoption, citing its ability to support inference workloads at the edge and its consumption-based business model.

Morningstar noted that developer adoption continued to accelerate, with the number of developers using Workers increasing to 7.4 million from 4.5 million in December.

Channel partner sales also grew 67% during the quarter and accounted for 31% of total revenue, reflecting stronger enterprise demand.

Analysts also said Cloudflare is well positioned to benefit from rising cybersecurity spending as AI adoption reshapes the cyber-risk landscape.

RBC Capital Markets said the company "has multiple, durable avenues to AI-monetization over the long-to-medium term that warrants a premium valuation."

Wall Street raises price targets

Brokerages responded positively to the company's results and outlook.

TD Cowen raised its price target on Cloudflare to $355 from $300 while maintaining its Buy rating.

The firm said the company delivered record year-over-year additions across large customer segments and large contracts, adding that Cloudflare is "well positioned to play a lead role as AI unfolds."

Barclays also lifted its price target to $355 from $300 while reiterating its Overweight rating, pointing to accelerating revenue growth during the quarter.

CEO highlights rise of the "agentic Internet"

Chief Executive Matthew Prince said the company's momentum accelerated during the second quarter, supported by record additions of large customers, stronger developer adoption and growing enterprise demand.

“It's clear that the agentic future needs a new kind of cloud. Developers are flocking to Cloudflare because our Workers developer platform gives them what they need to build that agentic future. We're the fastest, we're the most secure, and the most cost-effective place to build, deploy, and scale agents and the code they generate,” Prince said during the earnings call.

Prince also said more than half of the traffic flowing across Cloudflare's network was non-human for the first time during the quarter as AI agents increasingly interacted with websites and online services.

He described the shift as “a fundamental rewrite of the Internet,” adding that Cloudflare is building the infrastructure, developer tools and payment systems needed to power what he called the “agentic Internet.”