Can Cloudflare's Workers Platform Lead Its Next Phase of Growth?

Cloudflare’s NET first-quarter 2025 results show that its Workers platform may become a key part of its future growth. The company signed its biggest-ever deal, worth more than $100 million, mainly because of the Workers platform. This deal shows that large customers now see Cloudflare as more than just a security or network company.

Cloudflare Workers lets developers build and run applications closer to users. Since its launch in 2017, the platform has been adopted by more than three million developers who are actively using the platform.

Cloudflare Workers started as a serverless platform that helped developers to build, deploy, and scale applications across Cloudflare's global network. Convenient to use, the Workers platform enabled developers to take actions using a single command and reduced infrastructure management and configuration complexities. Now the company is evolving the platform with AI implementation.

The Workers AI tool embedded inside the Workers developer platform has experienced an explosive 4,000% year-over-year rise in inference requests as reported in the first-quarter earnings. Cloudflare is now focusing on enriching its Workers platform with the Model Context Protocol (MCP) server.

The MCP server running inside its Workers platform will enable its clients to leverage MCP’s standardized, low-latency connection between AI models and software platforms. This will further help these clients to deploy AI agents to simplify tasks like managing workflows, handling transactions, or querying business data. This value addition can trigger more upsells and customer acquisition, hence boosting this platform’s growth.

How Competitors Fare Against Cloudflare

Alphabet GOOGL and Amazon AMZN also provide general-purpose serverless and container-based edge deployment solutions. Alphabet offers Google Cloud Functions + Cloud Run with Cloud CDN, while Amazon Web Services offers Lambda & Lambda@Edge.

While Alphabet is implementing AI in its Cloud Run solution, Amazon’s AWS Lambda & Lambda@Edge leverage deep integrations with AWS services, robust tooling, and a mature developer base. Additionally, AWS Fargate is the AWS service that also enables serverless compute for containers.

Cloudflare provides configuration-less auto-scaling, a high-performance global network, and low latency in serverless services that are compatible with all the major programming languages, including JS, Rust, C, and C++, so it will thrive in this competitive environment.

Cloudflare’s Price Performance, Valuation and Estimates

Shares of NET have surged 66.5% year to date compared with the Zacks Internet - Software industry’s growth of 13.2%.

From a valuation standpoint, NET trades at a forward price-to-sales ratio of 26.61X, higher than the industry’s average of 5.68X.

The Zacks Consensus Estimate for NET’s fiscal 2025 and 2026 earnings implies year-over-year growth of 5.33% and 31.62%, respectively. The estimates for fiscal 2025 earnings have been revised downward in the past 60 days and the 2026 earnings have been revised downward in the past seven days.

NET currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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