Is Claude Going to Kill Cloudflare Stock?

AI software engineering by Tapati Rinchumrus via Shutterstock

Aanchal Sugandh

Wed, February 25, 2026 at 3:49 AM GMT+9 4 min read

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•                                       StockStory Top Pick 
  

  NET

  +2.26%

  MA

  +0.40%

Cloud-native security stocks rarely trade in isolation, and the events of Friday, Feb. 20, proved that point with force. When Anthropic PBC introduced a research preview of Claude Code Security, a tool built to autonomously identify and patch software vulnerabilities, shares across the space retreated as participants weighed whether proactive, automated remediation could compress the long-term value of established enterprise security suites.

Cloudflare (NET) felt that pressure directly. The stock fell 8.1% on Feb. 20 as concerns spread that artificial intelligence (AI)-native systems may pull security further upstream, away from reactive monitoring and toward autonomous repair. Yet markets often overreact to the first headline.

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The broader arc of the Internet still points toward deeper integration of AI, agents, and distributed infrastructure. That re-platforming demands more connectivity, more security layers, and more performance optimization. In this backdrop, Cloudflare continues to position itself at the center of that transition.

For instance, Cloudflare’s partnership with Mastercard (MA) focuses on developing cybersecurity tools for businesses, governments, and critical infrastructure. The company also delivered a complete Secure Access Service Edge platform aligned with post-quantum encryption standards, enabling organizations to protect sensitive data as cryptographic demands evolve.

With these developments firmly in place, Cloudflare does not appear poised to fade under competitive pressure anytime soon.

About Cloudflare Stock

Headquartered in San Francisco, California, Cloudflare is a global connectivity cloud that delivers integrated security, networking, and performance services. With a market cap of around $56 billion, the company protects applications, Application Programming Interfaces (APIs), and networks across cloud and on-premises environments.

Its platform spans Zero Trust architecture, developer tools, and consumer-facing services, creating an ecosystem that embeds security directly into Internet traffic flows.  Nevertheless, over the past 52 weeks, the stock has gained 12.16%.

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However, competitive pressure and shifting sentiment drove an 15.38% decline over the last six months and a 14.43% pullback in the past three months.

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From a valuation standpoint, NET stock is trading at 142.36 times forward adjusted earnings and 20.14 times sales. Those multiples exceed industry averages, yet they sit below the company’s own five-year average multiples, suggesting a favorable entry point for long-term investors who believe in the durability of its growth trajectory.

Cloudflare Surpasses Q4 Earnings

On Feb. 10, the stock gained 3.6% after the company surpassed fourth-quarter fiscal 2025 expectations and issued constructive guidance. The following session added another 5.2%, reinforcing the view that fundamentals can steady sentiment even in a volatile sector.

Revenue increased 33.6% year-over-year (YOY) to $614.5 million, exceeding analyst estimates of $591 million. Non-GAAP EPS grew 47.4% from the year-ago value to $0.28, beating the Street’s forecast of $0.27. Moreover, non-GAAP net income rose 55.2% from the prior year’s quarter to $106.8 million.

During the quarter, Cloudflare also closed its largest Annual Contract Value (ACV) deal in company history, averaging $42.5 million per year. Total new Annual Contract Value (ACV) grew nearly 50% YOY, marking the fastest growth rate since 2021.

Building on that, Cloudflare’s management guided Q1 fiscal 2026 revenue to a range of $620 million to $621 million, ahead of the $614 million analysts expected. The company also projects non-GAAP net income per share of $0.23.

For the full year 2026, it expects revenue between $2.79 billion and $2.80 billion, surpassing the $2.74 billion consensus, alongside non-GAAP net income per share of $1.11 to $1.12.

Analysts, meanwhile, forecast fiscal year 2026 Q1 loss per share to narrow 45.5% YOY to $0.06. For full-year 2026, they model a 74.4% improvement to a $0.11 loss per share, followed by an 81.8% improvement to a $0.02 loss per share in fiscal 2027.

What Do Analysts Expect for Cloudflare Stock?

At RBC Capital Markets, analyst Matthew Hedberg has assigned NET stock an “Outperform” rating and raised his price target from $230 to $240, reflecting confidence in Cloudflare’s operating momentum.

The constructive tone carries over to Citigroup, where analyst Fatima Boolani has lifted her price objective to $265 from $260 while maintaining a “Buy” rating. She views the company’s Q4 2025 results as strong, reinforcing the view that execution remains firmly on track.

In a similar vein, Wells Fargo & Company analyst Ryan MacWilliams has reiterated an “Overweight” rating and increased his target from $265 to $270. The adjustment underscores a steady vote of confidence in Cloudflare’s strategic positioning as AI-driven demand reshapes enterprise security spending.

Wall Street currently assigns the stock an overall “Moderate Buy” rating. Among 33 analysts, 19 rate it a “Strong Buy,” two have assigned a “Moderate Buy,” nine recommend Hold, and three have issued a “Strong Sell.”

To that end, the average price target of $237.17 implies potential upside of 44.4%. Meanwhile, the Street-high target of $300 points to a possible gain of 82.7% from current levels.

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_ On the date of publication, Aanchal Sugandh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com _

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