NET - Cloudflare: Don't Fall For Goldilocks Excitement

2024-07-07 10:00:00 ET

Summary

• Cloudflare plans to dominate the AI inference market with their distributed network capabilities.
• Despite the strong growth potential in the AI market, the company offered up disappointing Q2 guidance, raising concerns about short-term performance.
• NET stock has surged to unsustainable valuation levels, making it a risky investment despite promising long-term prospects.

Just when Cloudflare, Inc. ( NET ) appeared set for a reasonable valuation where investors could load up for the long term, the stock bounced off support and has surged to close the gap following the disappointing Q1 numbers. The cloud networking and cybersecurity company has outlined a promising future with AI inferencing market growth. My investment thesis is Neutral on the stock here, with the ongoing rally likely to continue while the valuation is stretched already....

For further details see: