NET AI Stock Analysis – Buy, Hold, or Avoid?
Cloudflare, Inc. (NET)
Fundamentals
Cloudflare (NET) continues to post robust topline growth, consistently exceeding revenue expectations and showing marked progress towards profitability. Despite ongoing negative net income, the company has delivered positive and accelerating EPS surprises, coupled with strong gross margins and improving operational metrics, signaling healthy underlying fundamentals.
Financial Highlights
- Revenue
- Net Income
- Net Margin (%)
Revenue
33.60% YoY
Q4 2025
Net Income
6.00% YoY
Q4 2025
Net Margin
Q4 2025
Growth Metrics
Revenue Growth YoY
Latest Quarter: Q4 2025
Net Income Growth YoY
Latest Quarter: Q4 2025
Revenue Per Share Growth YoY
Latest Quarter: Q4 2025
EPS Growth YoY
Latest Quarter: Q4 2025
Book Value Per Share Growth YoY
Latest Quarter: Q4 2025
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Revenue | 614.5M | 562.0M | 512.3M | 479.1M | 459.9M | 430.1M | 401.0M | 378.6M |
| Revenue Growth YoY | +33.60% | +30.68% | +27.76% | +26.54% | +26.89% | +28.15% | +29.99% | +30.47% |
| Net Income | -12.1M | -1.3M | -50.4M | -38.5M | -12.8M | -15.3M | -15.1M | -35.5M |
| Net Income Growth YoY | +6.00% | +91.59% | -234.57% | -8.19% | +53.89% | +34.86% | +84.04% | +6.67% |
| EPS | -$0.03 | -$0.00 | -$0.15 | -$0.11 | -$0.04 | -$0.04 | -$0.04 | -$0.10 |
| EPS Growth YoY | +7.77% | +91.74% | -227.77% | -10.00% | +54.95% | +36.27% | +84.18% | +16.67% |
Profitability Metrics
Gross Margin
TTM
Operating Margin
TTM
Net Margin
TTM
Return on Equity
TTM
Return on Assets
TTM
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Gross Margin | 74.24% | 73.97% | 74.88% | 75.88% | 76.29% | 77.69% | 77.80% | 77.54% |
| Operating Margin | -7.39% | -6.67% | -13.13% | -11.11% | -7.45% | -7.14% | -8.61% | -14.41% |
| Net Margin | -1.97% | -0.23% | -9.85% | -8.03% | -2.79% | -3.56% | -3.76% | -9.39% |
| Return on Equity (ROE) | -0.83% | -0.10% | -4.07% | -2.70% | -1.23% | -1.58% | -1.71% | -4.46% |
| Return on Assets (ROA) | -0.21% | -0.02% | -0.94% | -1.09% | -0.41% | -0.53% | -0.55% | -1.35% |
Technical Analysis
Cloudflare (NET) is currently in a consolidation phase with a strong bearish trend as price is trading below key moving averages and a death cross is active. The RSI is neutral-low, suggesting limited downward momentum acceleration, while the MACD and volume indicators present mixed signals. Important support levels near $172 and $134 could provide downside floors, while resistance exists around $195-$211, framing a tight range in the near term.
No extreme reading
Price in downtrend
Range-bound market
50 below 200 - bearish
Key Technical Values
Price with Moving Averages
50-day, 150-day and 200-day simple moving averages
Relative Strength Index
Momentum oscillator measuring speed and magnitude of price changes
RSI (14)
Earnings
Cloudflare (NET) continues to post robust topline growth, consistently exceeding revenue expectations and showing marked progress towards profitability. Despite ongoing negative net income, the company has delivered positive and accelerating EPS surprises, coupled with strong gross margins and improving operational metrics, signaling healthy underlying fundamentals.
Latest Earnings
Q4 2025 Earnings (Dec 31, 2025)
Earnings Per Share (EPS)
Actual
$0.28
Estimated
$0.27
Surprise
+$0.01
Surprise %
+3.21%
Revenue
Actual
$614.51M
Estimated
$591.34M
Surprise
+$23.16M
Surprise %
+3.92%
Historical Earnings
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Earnings Per Share | ||||||||
| EPS (Actual) | $0.28 | $0.27 | $0.21 | $0.16 | $0.19 | $0.20 | $0.20 | $0.16 |
| EPS (Estimated) | $0.27 | $0.23 | $0.18 | $0.16 | $0.18 | $0.18 | $0.14 | $0.13 |
| EPS Surprise | +$0.01 | +$0.04 | +$0.03 | -$0.00 | +$0.01 | +$0.02 | +$0.06 | +$0.03 |
| % Diff | +3.2% | +17.3% | +14.5% | -2.3% | +5.6% | +11.5% | +42.0% | +21.4% |
| Revenue | ||||||||
| Revenue (Actual) | $614.51M | $562.03M | $512.32M | $479.09M | $459.95M | $430.08M | $401M | $378.6M |
| Revenue (Estimated) | $591.34M | $544.65M | $501.27M | $469.28M | $452.05M | $424.14M | $394.11M | $373.24M |
| Revenue Surprise | +$23.16M | +$17.38M | +$11.04M | +$9.81M | +$7.89M | +$5.94M | +$6.89M | +$5.37M |
| % Diff | +3.9% | +3.2% | +2.2% | +2.1% | +1.7% | +1.4% | +1.7% | +1.4% |
Valuation
Cloudflare (NET) currently exhibits high valuation multiples driven by strong revenue growth and market leadership in cloud security and edge computing. Despite negative earnings and mounting debt, the company has sustained robust top-line momentum and positive analyst sentiment. The technical analysis shows mixed but slightly positive signals amidst recent volatility, while market sentiment remains cautiously optimistic with a prevailing buy bias from analysts.
Valuation Metrics
Price to Earnings
TTM
Price to Sales
TTM
Price to Book
TTM
Enterprise Value to EBITDA
TTM
Enterprise Value to Revenue
TTM
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Price to Earnings | -1432.82 | -14237.63 | -337.24 | -253.29 | -720.78 | -451.59 | -474.16 | -227.81 |
| Price to Sales | 112.64 | 130.72 | 132.83 | 81.32 | 80.54 | 64.39 | 71.32 | 85.55 |
| Price to Book | 47.44 | 54.54 | 54.89 | 27.32 | 35.41 | 28.46 | 32.44 | 40.63 |
| Enterprise Value to EBITDA | 490.99 | 901.37 | -246451.68 | 5838.19 | 799.74 | 749.76 | 866.81 | 2189.47 |
| Enterprise Value to Revenue | 117.12 | 135.07 | 136.62 | 83.97 | 83.40 | 67.34 | 74.51 | 88.67 |
Sentiment & Analyst Ratings
Cloudflare (NET) sentiment is mixed amid recent sharp share price declines driven by sector-wide concerns and insider selling, overshadowing otherwise strong growth fundamentals and AI-driven opportunities. Analysts remain cautiously optimistic with a moderate buy consensus and solid medium- to long-term growth outlook bolstered by expanding AI and edge computing relevance. Retail investor confidence appears resilient despite heightened volatility and valuation sensitivity.
Analyst Recommendations
Risk Assessment
Cloudflare (NET) demonstrates a solid liquidity position with a strong ability to meet short-term obligations but exhibits elevated leverage that heightens financial risk. The company operates in a highly competitive and rapidly evolving cybersecurity market, facing significant AI-driven threat dynamics and regulatory challenges. While recent stock volatility reflects macroeconomic and technological disruption concerns, Cloudflare's innovation and market position provide potential long-term rewards balanced by considerable downside risks.
Liquidity & Solvency
Current Ratio
Latest Quarter: Q4 2025
Quick Ratio
Latest Quarter: Q4 2025
Debt-to-Equity
Latest Quarter: Q4 2025
Debt-to-Assets
Latest Quarter: Q4 2025
| Q4 2025 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2024 | Q3 2024 | Q2 2024 | Q1 2024 | |
|---|---|---|---|---|---|---|---|---|
| Liquidity Metrics | ||||||||
| Current Ratio | 1.98 | 2.04 | 5.14 | 3.20 | 2.86 | 3.37 | 3.51 | 3.51 |
| Quick Ratio | 1.98 | 2.04 | 5.14 | 3.20 | 2.86 | 3.37 | 3.51 | 3.51 |
| Solvency Metrics | ||||||||
| Debt-to-Equity | 2.54 | 2.60 | 2.79 | 1.04 | 1.40 | 1.49 | 1.63 | 1.80 |
| Debt-to-Assets | 0.61 | 0.61 | 0.62 | 0.40 | 0.44 | 0.47 | 0.49 | 0.51 |
Liquidity Assessment
Current Ratio: 1.98(Strong)
Quick Ratio: 1.98(Strong)
The company has strong liquidity with sufficient short-term assets to cover liabilities.
Solvency Assessment
Debt-to-Equity: 2.54(High)
Debt-to-Assets: 0.61(High)
The company has relatively high debt levels, which may increase financial risk in economic downturns.
Frequently Asked Questions about NET
AI Answers: Common Questions About NET
Get AI-powered answers to the questions investors ask most about Cloudflare, Inc.
Cloudflare is not an ideal buy right now for short-term traders due to technical weakness (death cross, RSI ~33) and recent 13%+ price drop, but long-term investors may find value if willing to accept volatility and a premium valuation (P/E -556.73, P/S far above sector). Wait for stabilization near $172 support or a confirmed reversal before new entries.
If you are a short-term trader or risk-averse, consider reducing exposure given the bearish technical setup and deteriorating sentiment. Long-term holders with conviction in the growth story can hold, as fundamentals remain strong and the company is progressing toward profitability.
The biggest risks are high leverage (debt-to-equity >2.5, debt >60% of assets), ongoing GAAP net losses with negative interest coverage, and sector volatility from AI-driven disruption and regulatory pressures. A failure to improve margins or refinance debt could pressure the stock further.
Key technical levels: support at $172 and $134, resistance at $195-$211. Near-term, expect trading within this range unless a breakout or breakdown occurs. Analyst targets are generally above current price, but technicals suggest caution until a reversal is confirmed.
Cloudflare is overvalued by traditional metrics: P/E is -556.73, P/S and P/B are much higher than sector averages, and EV/EBITDA is stretched. The premium reflects high growth expectations, but current profitability does not justify the multiples absent continued rapid expansion.
Fundamentally, Cloudflare is strong: revenue growth is ~30% YoY, gross margins are above 74%, and adjusted EPS is improving with a visible path to GAAP profitability. However, net margins and ROE remain negative, and leverage is high.
Technical analysis is bearish/neutral: price is below all major moving averages, a death cross is active, RSI is near oversold at 32.97, and volume suggests consolidation. Watch $172 as key support; a break below could trigger further downside.
Key catalysts include upcoming earnings (which have consistently beaten expectations), new product launches in AI/edge security, and sector-wide macro events. Insider selling and AI competitor launches are recent negative catalysts.
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