Cloudflare (NYSE: NET) saw its shares surge more than 16% in premarket trading on Friday after the company raised its full-year 2026 revenue and earnings guidance, signaling robust demand for AI infrastructure and cybersecurity services.
The company's updated outlook follows its second-quarter results, which beat expectations and showed accelerating growth in its developer platform and enterprise customer additions. The upbeat guidance comes on the heels of Amazon's report of its strongest cloud growth in over four years, with warnings that cloud capacity demand will outpace supply in 2026, reinforcing investor optimism around AI infrastructure spending.
Raised guidance and key metrics
Cloudflare now expects full-year 2026 revenue between $2.86 billion and $2.87 billion, up from its previous forecast of $2.805 billion to $2.813 billion. The revised outlook is ahead of the consensus estimate of $2.81 billion, according to LSEG data.
The company also increased its adjusted earnings forecast to between $1.25 and $1.26 per share, up from its earlier outlook of $1.19 to $1.20. Wall Street had expected fiscal 2026 earnings of about $1.20 per share.
AI platform growth drives optimism
Analysts attribute the stronger guidance to Cloudflare's expanding exposure to AI infrastructure. Morgan Stanley highlighted the Workers developer platform as the company's fastest-growing business, benefiting from a shift toward a usage-based model.
Morningstar described Cloudflare as a "compelling picks-and-shovels play" on AI adoption, citing its ability to support inference workloads at the edge and its consumption-based business model. Developer adoption continued to accelerate, with the number of developers using Workers increasing to 7.4 million from 4.5 million in December.
Channel partner sales grew 67% during the quarter and accounted for 31% of total revenue, reflecting stronger enterprise demand. Analysts also noted that Cloudflare is well positioned to benefit from rising cybersecurity spending as AI adoption reshapes the cyber-risk landscape.
RBC Capital Markets said the company "has multiple, durable avenues to AI-monetization over the long-to-medium term that warrants a premium valuation."
Wall Street raises price targets
Brokerages responded positively to the results and outlook. TD Cowen raised its price target on Cloudflare to $355 from $300 while maintaining a Buy rating, citing record year-over-year additions across large customer segments and large contracts. The firm added that Cloudflare is "well positioned to play a lead role as AI unfolds."
Barclays also lifted its price target to $355 from $300 while reiterating an Overweight rating, pointing to accelerating revenue growth during the quarter.
CEO highlights the 'agentic Internet'
Chief Executive Matthew Prince said the company's momentum accelerated during the second quarter, supported by record additions of large customers, stronger developer adoption, and growing enterprise demand.
"It's clear that the agentic future needs a new kind of cloud. Developers are flocking to Cloudflare because our Workers developer platform gives them what they need to build that agentic future. We're the fastest, we're the most secure, and the most cost-effective place to build, deploy, and scale agents and the code they generate," Prince said during the earnings call.
Prince also noted that for the first time, more than half of the traffic flowing across Cloudflare's network was non-human during the quarter, as AI agents increasingly interacted with websites and online services. He described the shift as "a fundamental rewrite of the Internet," adding that Cloudflare is building the infrastructure, developer tools, and payment systems needed to power what he called the "agentic Internet."
For context on the broader AI infrastructure landscape, see our coverage of Broadcom's AI-driven momentum and Rolls-Royce's record high on AI demand.
This article is for informational purposes only and does not constitute financial advice.
