Why Cloudflare Stock Is Jumping Today

Cloudflare (NYSE: NET) stock is seeing another day of impressive gains in Monday's trading. The cybersecurity and web services company's share price was up 3.8% as of 2:45 p.m. ET. Meanwhile, the S&P 500 index was up 0.7%, and the Nasdaq Composite index was up 1.1%. Cloudflare had been up as much as 5.9% earlier in the session.

Following explosive gains in Friday's trading, Cloudflare stock is seeing continued bullish momentum thanks to coverage from analysts. Before the market opened this morning, Mizuho and Susquehanna raised their price targets for the tech company's stock -- and the new estimates are helping lift its share price higher

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Cloudflare climbs on price target increases

In a note published this morning, Mizuho analyst Gregg Moskowitz raised his one-year price target on Cloudflare from $130 per share to $160 per share. On the other hand, the analyst still maintained a neutral rating on the stock. As of this writing, the new price target actually suggests potential downside of 7.5% for Cloudflare.

Meanwhile, Susquehanna raised its one-year price target from $95 per share to $170 per share and also maintained a neutral rating on the stock. Susquehanna's new target suggests downside of roughly 1.7% as of this writing.

While Mizuho and Susquehanna both significantly increased their valuation targets for Cloudflare, their neutral ratings and price estimates reflect some concerns about the company's valuation. While both firms had positive things to say about the fourth-quarter results the company published last week, each outlined some concerns about the potential for a more challenging operating backdrop in 2025.

On the other hand, the coverage from the two firms that was published today reflected sentiments that the company is roughly fairly valued at current prices. So even though Mizuho and Susquehanna aren't bullish on Cloudflare at its current valuation range, they still think the company has grown into a valuation that's significantly above their previous targets.

What comes next for Cloudflare?

With the Q4 results that it published after the market closed last Thursday, Cloudflare guided for sales to come in between $2.09 billion and $2.094 billion in 2025. If the company were to hit that target, it would mean delivering annual sales growth of roughly 25%.

But Cloudflare's sales guidance actually fell short of the average Wall Street estimate, which had called for sales of $2.1 billion. Guidance for non-GAAP (adjusted) earnings per share between $0.79 and $0.80 also fell short of the average analyst estimate's call for per-share earnings of $0.85.

Likely even more than its strong Q4 results, Cloudflare's explosive rally at the end of last week was powered by comments from management indicating that the company was potentially on the verge of some major artificial intelligence (AI) breakthroughs. In particular, CEO Matthew Prince drew a parallel between the improvements in AI model training efficiency delivered by DeepSeek and improvements in AI inference efficiency that his own company is seeing.

If Cloudflare can deliver on management's outlook on AI technologies, its share price could continue to climb well above current levels this year. On the other hand, expectations have now been raised -- and that's made the stock a riskier play.

Should you invest $1,000 in Cloudflare right now?

Before you buy stock in Cloudflare, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Cloudflare wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $795,728!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

Learn more »

*Stock Advisor returns as of February 7, 2025

Keith Noonan has positions in Cloudflare. The Motley Fool has positions in and recommends Cloudflare. The Motley Fool has a disclosure policy.