Here's What Makes Cloudflare (NET) Worth Holding Long-Term

Sands Capital, an investment management company, released its “Sands Capital Select Growth Strategy” Q2 2025 investor letter. A copy of the letter can be downloaded here.  U.S. large-cap growth equities recovered from a sharp sell-off in early April by delivering strong returns in the second quarter. The quarterly performance was driven by muted inflation, strong corporate earnings, and improving sentiment around artificial intelligence (AI) and global trade. The portfolio returned 27.7% in the quarter, outperforming the benchmark Russell 1000 Growth Index's 17.8% gain. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its second-quarter 2025 investor letter, Sands Capital Global Growth Strategy highlighted stocks such as Cloudflare, Inc. (NYSE:NET). Cloudflare, Inc. (NYSE:NET) is a cloud services provider that delivers a range of services to businesses worldwide. The one-month return of Cloudflare, Inc. (NYSE:NET) was 15.01%, and its shares gained 185.69% of their value over the last 52 weeks. On September 15, 2025, Cloudflare, Inc. (NYSE:NET) stock closed at $226.01 per share, with a market capitalization of $78.76 billion.

Sands Capital Global Growth Strategy stated the following regarding Cloudflare, Inc. (NYSE:NET) in its second quarter 2025 investor letter:

"Cloudflare, Inc. (NYSE:NET) is an emerging network-as-a-service leader. The business reported a strong quarter, highlighted by its largest deal to date—a five-year, $130 million contract for its Workers platform. This deal underscores Workers' growing competitiveness against hyperscalers on both performance and price. Management expressed confidence that more nine-figure deals are within reach. The quarter also included major Zero Trust wins, including a $12.7 million, seven-year contract and a large U.S. government deal, signaling broader traction across use cases. Revenue came in slightly ahead of consensus, and full-year guidance for 25 percent growth was reaffirmed. While capital expenditures rose due to tariff-related pull-forwards, Cloudflare still expects to meet its full-year targets. Strong momentum and improving sales execution continue to support our conviction in the long-term case."

Cloudflare, Inc. (NYSE:NET) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 59 hedge fund portfolios held Cloudflare, Inc. (NYSE:NET) at the end of the second quarter, which was 65 in the previous quarter. Cloudflare, Inc.’s (NYSE:NET) revenue for the second quarter increased 28% year-over-year to $512.3 million. While we acknowledge the potential of Cloudflare, Inc. (NYSE:NET) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Cloudflare, Inc. (NYSE:NET) and shared Brown Advisory Mid-Cap Growth Strategy's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.