Is Cloudflare, Inc. (NET) The Best Performing Cybersecurity Stock So Far in 2025?

We recently published a list of 11 Best Performing Cybersecurity Stocks So Far in 2025. In this article, we are going to take a look at where Cloudflare, Inc. (NYSE:NET) stands against other best performing cybersecurity stocks so far in 2025.

While the Trump administration’s shifting tariff policy, which includes the announcement of steep tariffs followed by a 90-day pause on many import taxes, has prompted some economists to predict a recession within the next year, financial analysts believe the cybersecurity sector could prove to be relatively resilient. Wedbush Securities analysts see cybersecurity as a “defensive” investment that can help investors weather what they call an impending “Category 5 storm.” Another tailwind for the industry comes in the form of increased cyberthreat activities following economic downturns. These add to the momentum of rising cyberattacks expected by analysts for this year.

Although tariffs are projected to have a minimal direct impact on cybersecurity, as most of companies in the industry focus on services rather than physical products, Sonu Shankar, chief product officer of Phosphorus Cybersecurity, an IoT security company, points out that as other industries suffer financial strain and restrict their budgets, spending on security may also face cuts.

As companies go through an increasingly complicated cyber threat landscape, keeping up with developing cybersecurity trends has become critical. According to McKinsey, global spending on cybersecurity products and services hit the $200 billion mark in 2024, a significant increase from $140 billion in 2020, as the number and sophistication of attacks increase. In addition, the cybersecurity industry is expected to grow at an annual rate of 12.4% between 2024 and 2027, surpassing historical growth rates as firms ramp up efforts to combat evolving threats.

Cybersecurity has undoubtedly grown in relevance as more government services and data become digitized, according to Samir Jain, vice president of policy at the Center for Democracy & Technology, a non-profit that promotes digital rights and freedom of speech. Moreover, as cyber attacks become more complex, the demand for trained workers has increased drastically, with cybersecurity companies forecasting that over 3.5 million cybersecurity roles would remain vacant by 2025. As a result, there are calls for broadening recruiting processes to expand the candidate pool.

Our Methodology

For this list, we sifted through financial media reports and identified cybersecurity stocks that were popular among elite hedge funds and favored by analysts. We then checked their year-to-date performance and selected the 11 best performing stocks from our initial pool of 35 popular stocks. The names on this list appear in ascending order of their year-to-date performance, as of April 25.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Cloudfare, Inc. (NYSE:NET)

Year-to-Date performance as of April 25: 5.14%

Number of Hedge Fund Holders: 55

Cloudflare, Inc. (NYSE:NET) is a cloud-based cybersecurity and website management company that also offers routing and developer security solutions. It operates in numerous main categories, including Security Solutions, Performance Enhancement, Reliability, Zero Trust Infrastructure, and others.

Cloudflare, Inc. (NYSE:NET) reported $459.9 million in revenues for the fourth quarter of 2024, a 27% increase over the previous year, driven by robust client growth and business adoption. The company’s operating income increased 69% to $67.2 million, while margins improved by 360 basis points to 14.6%.

On April 17, Mizuho upgraded Cloudflare, Inc. (NYSE:NET) to Outperform, citing improved sales pipelines, rising acceptance of its Workers AI product, and a favorable environment for growth reacceleration in the second half of 2025. Mizuho said partners anticipate an increase in Cloudflare-related business, which supports management’s previous guidance. While macroeconomic uncertainty persists, the brokerage said that Cloudflare’s scalable architecture and emphasis on innovation position it well in the rapidly evolving AI environment.

Baron Fifth Avenue Growth Fund stated the following regarding Cloudflare, Inc. (NYSE:NET) in its Q4 2024 investor letter:

“We took advantage of recent inflows to add to several of our existing holdings, in which our relative conviction level and attractive valuations warranted an increase in position sizes. Our largest addition was Cloudflare, Inc. (NYSE:NET), which offers enhanced security and performance for websites, apps, and software as a service. The company continues reporting solid quarterly results with 28% year-on-year revenue growth and 14.8% non-GAAP operating margins, which increased 210bps year-on-year. A double-digit year-on-year increase in sales productivity has started to benefit EMEA and APAC growth rates. Customer additions were also robust and remaining performance obligations were well ahead of expectations, up 39%. In addition, the company announced the hiring of CJ Desai as President of Product & Engineering, a well-regarded executive that helped build ServiceNow into one of the best software businesses of all time – and a large position in the portfolio. Our relative conviction in Cloudflare warranted adding to our position, given the company’s visionary management team, and stacking S curves or markets that it can address with its platform as it helps companies modernize their networking infrastructure.”

Overall, NET ranks 10th on our list of best performing cybersecurity stocks so far in 2025. While we acknowledge the potential for NET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%.  If you are looking for an AI stock that is more promising than NET but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.

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