We came across a bullish thesis on Cloudflare, Inc. on Expanse Stocks’s Substack by Nikotes. In this article, we will summarize the bulls’ thesis on NET. Cloudflare, Inc.’s share was trading at $195.85 as of February 13th. NET’s forward P/E was 169.49 according to Yahoo Finance.
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Cloudflare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. NET delivered a standout fourth quarter of 2025, with revenue growth re-accelerating to 34% year over year and new annual contract value bookings surging nearly 50%, signaling that the company’s multi-year go-to-market restructuring is translating into tangible momentum. Management, led by CEO Matthew Prince, highlighted record enterprise wins, including its largest contract ever, alongside rising sales productivity and adoption of its “Pool of Funds” contracting model, which reduces friction and encourages broader platform commitments.
A central driver of the bullish thesis is Cloudflare’s positioning as infrastructure for the emerging “agentic internet,” where AI agents generate exponentially higher traffic volumes than humans, creating demand across both security and compute products such as Workers. Unlike many software peers, Cloudflare is already monetizing AI adoption while maintaining capital efficiency, with capex at roughly 12–15% of revenue and a Rule of 40 near 50, supporting premium valuation arguments.
The company is also increasingly competing with hyperscalers like Amazon Web Services, Microsoft Azure, and Google Cloud Platform, winning workloads through its serverless, edge-native architecture that aligns costs with performance efficiency. Longer term, optionality around monetizing AI content access—acting as an intermediary between content owners and AI companies—could represent an additional growth vector that remains underappreciated.
While risks include potential gross margin compression, hyperscaler retaliation, and macro IT spending volatility, Cloudflare’s re-accelerating growth, expanding enterprise penetration, and durable network effects position it as a high-quality compounder capable of sustaining elevated growth with improving profitability over time.
Previously, we covered a bullish thesis on Cloudflare, Inc. (NET) by Oliver | MMMT Wealth in April 2025, which highlighted the company’s network effects, managing 20% of global web traffic, strong growth trajectory, and approaching profitability inflection. NET’s stock price has appreciated by approximately 83.36% since our coverage. Nikotes shares a similar view but emphasizes GTM-driven re-acceleration and AI infrastructure tailwinds.
