NET Gains From Synergy in Its AI and Security Products: What's Next?

Cloudflare NET has structured its product portfolio to increasingly benefit from strong synergy and seamless compatibility across its offerings. Cloudflare now commands more than 55 revenue-generating products, enabling frictionless adoption and consumption of its products, adding to NET’s annual contract value and net retention rate.

Throughout the past few years, Cloudflare has created a strong suite of products to deploy an edge network and security at scale. These are now enabling NET to provide a low-latency network at an affordable cost, giving it a competitive advantage among AI companies that now deploy AI agents across Cloudflare’s globally distributed edge network. Cloudflare now serves roughly 80% of leading AI companies globally.

Furthermore, NET’s security offerings have strengthened its position in the content delivery network space. Cloudflare’s Magic Transit, Zero Trust, and modern SASE solutions are experiencing increased traction. The rise of AI scraping and bot activity is also helping NET monetize its products like AI Crawl Control, Bot Management, and future Pay-Per-Crawl models.

NET is also collaborating with industry leaders like Oracle, Alphabet, Coinbase, Visa, Mastercard and American Express for agent-to-agent payments and in-app extensions. Oracle and Cloudflare have partnered for deep native integration for hybrid and multi-cloud workloads through Oracle OCI. Alphabet and NET have collaborated on post-quantum cryptography standards and browser support.

Together, these tailwinds in AI, security, multi-cloud networking, developer platforms, and enterprise scale create a multi-layered growth engine for Cloudflare, providing it a moat that is hard to penetrate, giving NET long-term growth potential. The Zacks Consensus Estimate for its 2025 revenues projects year-over-year growth of 28%.

How Competitors Fare Against Cloudflare

Cloudflare has a well-diversified portfolio of solutions that serve across the cloud-based security space, content delivery network (CDN), website and application performance space, SASE, Zero-Trust and developer-based solutions. The diversification enables the company to provide end-to-end solutions for enterprise needs that only a few companies can deliver.

Akamai Technologies AKAM is the only competitor that provides a comprehensive suite of solutions like Cloudflare. Akamai Technologies specializes in CDN, cybersecurity, and edge cloud, where Cloudflare is scaling up rapidly through its cloud-native strategy of programmable edge and security.

Zscaler ZS is a dominant competitor of Cloudflare in the cybersecurity space. Zscaler leads the Zero Trust space and also offers SASE solutions. The company offers Zero Trust Network Access solutions and is now moving toward the Zero Trust Everywhere model, which secures cloud, endpoint and network.

However, NET’s focus on faster expansion at low cost is helping it gain market share at a rapid pace that is hard to match for Akamai Technology. Cloudflare’s security products are bundled into its edge platform, helping Customers adopt security as an add-on, which lowers friction, improves attach rates, and supports higher net retention. Zscaler, being a pureplay cybersecurity company, doesn’t benefit from this kind of cross-selling economics.

NET Price Performance, Valuation and Estimates

Shares of Cloudflare surged 76.6% in the past year compared with the Zacks Internet – Software industry’s growth of 0.9%.

NET One-Year Performance Chart

From a valuation standpoint, Cloudflare trades at a forward price-to-sales ratio of 26.37X, much higher than the industry’s average of 4.82X.

NET Forward 12 Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Cloudflare’s 2025 earnings implies year-over-year growth of 21.3%. The estimate for 2025 has been revised upward in the past 30 days.

Cloudflare currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research