Cloudflare (NYSE:NET) shares jumped around 16% in premarket trading on Friday after the cloud networking and cybersecurity company reported second-quarter results that exceeded Wall Street expectations and raised both its quarterly and full-year guidance.
The company delivered better-than-expected earnings and revenue, reflecting continued demand for its cloud infrastructure and artificial intelligence services.
Revenue and Earnings Beat Analyst Forecasts
Cloudflare reported adjusted earnings of $0.29 per share on revenue of $696.06 million, comfortably ahead of analyst expectations of $0.27 per share on revenue of $664.67 million.
For the third quarter, the company expects adjusted earnings of $0.34 per share on revenue between $736 million and $737 million. Analysts had forecast earnings of $0.32 per share on revenue of $722.60 million.
Cloudflare also increased its full-year 2026 outlook. It now expects adjusted earnings of between $1.25 and $1.26 per share on revenue ranging from $2.864 billion to $2.870 billion, compared with previous guidance of $1.19 to $1.20 per share on revenue between $2.805 billion and $2.813 billion.
AI Expansion Continues to Drive Growth
Cloudflare operates one of the world’s largest internet infrastructure networks, providing cloud connectivity, cybersecurity and content delivery services for millions of websites. According to the company, its platform processes an average of 102 million HTTP requests every second while helping customers improve website performance and defend against cyber threats such as DDoS attacks.
The company has also expanded its focus on artificial intelligence by providing infrastructure that enables customers to develop, deploy and scale AI applications and autonomous AI agents.
Chief Executive Matthew Prince said the internet is undergoing a significant transformation.
“As the web shifts to AI answer engines and agent-driven commerce, we are seeing a fundamental rewrite of the Internet for machine-to-machine traffic. Cloudflare sits at the center of this paradigm shift—building the infrastructure, controls, developer tools, and payment rails for the Agentic Internet,” he said.
Company Outperforms Broader Software Sector
Software stocks have generally faced pressure as investors assess the long-term impact of AI on traditional software providers. However, Cloudflare has significantly outperformed many of its peers.
Its Class A shares have gained 44.1% since the start of the year, compared with a 5.9% decline in the iShares Expanded Tech-Software Sector ETF.
Jefferies noted that Cloudflare’s third-quarter revenue guidance implies approximately 31% year-over-year growth.
The brokerage said the company is “exercising prudence in the Q3 guide,” explaining that the usage-based pricing model for its Workers serverless computing platform and the increasing share of pay-as-you-go contracts introduce greater revenue variability.
Despite that, Jefferies said it does not expect demand for artificial intelligence services or the Workers platform to weaken.
The analysts concluded: “NET remains a clear AI winner with multiple sustainable revenue drivers but premium after-hours valuation of 38x EV/NTM revenue keeps us Hold.”
Cloudflare stock price
