Cloudflare (NET) Valuation Check After AI Fueled Earnings Beat And Upbeat 2026 Revenue Outlook

Simply Wall St

Thu, February 12, 2026 at 9:21 AM GMT+9 3 min read

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•                                       StockStory Top Pick 
  

  NET

  +5.24%

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What Cloudflare’s latest earnings and AI momentum mean for the stock

Cloudflare (NET) just posted fourth quarter results that topped analyst expectations, highlighted record annual contract value tied to AI demand, and paired that with a positive 2026 revenue outlook that pushed the stock sharply higher.

See our latest analysis for Cloudflare.

Cloudflare’s share price has reacted strongly to this earnings news and upbeat 2026 revenue guidance, with a 7 day share price return of 13.5% and a 1 year total shareholder return of 9.6%. The 3 year total shareholder return of about 2.6x points to longer term momentum, despite a 90 day share price return of 11.3% and year to date share price return of 3.4%.

If Cloudflare’s AI story has caught your attention, it could be a good moment to see how other names stack up using our screener of 34 AI infrastructure stocks as potential ideas to research next.

With the shares up sharply and Cloudflare trading at a premium to many software peers, the key question for investors is simple: is this justifiably expensive growth, or could the recent AI fueled surge still leave a buying opportunity the market has not fully priced in?

Most Popular Narrative: 18.6% Undervalued

Cloudflare’s most followed narrative suggests a fair value above the last close of $189.41, with AI, security and zero trust at the center of the story.

The accelerating adoption of AI, explosion in global web traffic, and proliferation of IoT devices are driving increased demand for fast, secure, and resilient cloud-native infrastructure, which is Cloudflare’s core strength, evidenced by strategic partnerships with major AI companies and record-breaking DDoS mitigation, positioning the company for sustained top-line revenue growth and strengthening customer retention.

Read the complete narrative.

Want to see what is actually baked into that valuation call? The narrative leans on ambitious revenue growth, rising margins and a premium future earnings multiple. Curious how those ingredients fit together?

Result: Fair Value of $232.78 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, that upside view could be challenged if customer concentration bites, or if competition and pricing pressure keep weighing on gross margins and delay profitability.

Find out about the key risks to this Cloudflare narrative.

Another lens on valuation

That 18.6% “undervalued” fair value sits oddly next to how the market is pricing Cloudflare today. On a P/S of 33.1x versus a fair ratio of 13.6x, peer average of 13.3x, and US IT around 2x, the gap points to meaningful valuation risk if sentiment cools.

Story Continues  

See what the numbers say about this price — find out in our valuation breakdown.

NYSE:NET P/S Ratio as at Feb 2026

Build Your Own Cloudflare Narrative

If this fair value work does not quite match your view, or you prefer to test the numbers yourself, you can build a custom thesis in a few minutes using Do it your way.

A great starting point for your Cloudflare research is our analysis highlighting 1 key reward and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Cloudflare’s story has sharpened your thinking, do not stop here. Widen your watchlist and give yourself more options before your next move.

Target potential mispricing by scanning a focused list of quality names using our 52 high quality undervalued stocks and see which businesses stand out for further research.

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_ This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._

Companies discussed in this article include NET.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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