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Cloudflare Shares Surge Following Double Upgrade by Bank of America

Key Takeaways

Cloudflare’s stock experienced a notable increase after analysts from Bank of America issued a double upgrade for the cybersecurity firm. They highlighted the company’s strong potential in the realms of artificial intelligence and cybersecurity, asserting that Cloudflare is well-positioned to emerge as a significant player in the AI market.

On Tuesday, shares of Cloudflare (NET) saw substantial gains after Bank of America analysts elevated their recommendation, pointing to the firm’s promising growth prospects derived from advancements in AI and enhanced security solutions.

Bank of America asserted that Cloudflare is “set to be one of the prominent ‘AI winners’ in the software sector,” projecting a robust growth rate of 30% by 2028, bolstered by a surge in demand for AI and security functionality. The bank upgraded Cloudflare’s stock from “underperform” to “buy” and significantly raised its price target from $60 to $160, indicating a potential upside of approximately 23% as shares rose more than 4% during intraday trading, reaching $129.60.

The firm’s AI-as-a-Service model stands out in the competitive landscape. Bank of America noted that more customers are favoring Cloudflare’s AI offerings over the solutions provided by major cloud service providers, including Amazon Web Services, Oracle, and Microsoft Azure. A recent survey conducted by Bank of America revealed that Cloudflare’s existing customers plan to boost their AI expenditures by an average of 8% over the next year, aiming for around $100,000 per client.

In its recent fourth-quarter earnings report, Cloudflare exceeded analysts’ expectations, partially thanks to the acquisition of a record number of large clients during the quarter. This growth trajectory reflects the company’s ongoing commitment to expanding its service portfolio and solidifying its position in the evolving tech landscape.

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