Key Takeaways
- Cloudflare stock jumped after getting a double upgrade from analysts at Bank of America.
- The cybersecurity company is “poised to be a true ‘AI winner,'” the bank said.
- Customers are increasingly opting for Cloudflare’s AI-as-a-Service over offerings from hyperscalers like Amazon and Microsoft.
Cloudflare (NET) shares jumped Tuesday after Bank of America analysts gave the stock a double upgrade, citing strong growth potential in artificial intelligence and security.
The cybersecurity firm is “poised to be one of the true ‘AI winners’ in software,” BofA said, projecting 30% growth by 2028 driven by “AI and security momentum.” The bank upgraded the company to “buy” from “underperform” and raised its price target to $160 from $60. That implies roughly 23% upsides after shares of Cloudflare climbed more than 4% intraday to $129.60.
Cloudflare’s AI-as-a-Service represents a differentiated approach to artificial intelligence, BofA said, and one that customers are “increasingly choosing” over hyperscalers like Amazon (AMZN) Web Services, Oracle (ORCL) and Microsoft (MSFT) Azure. According to a BofA survey, Cloudflare customers are expected to increase their AI spending by an average of 8% over the next 12 months to about $100,000 per client.
Last month, Cloudflare reported fourth-quarter results that beat analysts’ expectations, driven in part by adding a record number of large customers in the period.
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