Observed Signal · Sep 17, 2026 · Investment Opinion · Source: CNBC Investing · Impact: 2/5 · Sentiment: Positive
Investor Steve Grasso buys Cloudflare stock on AI growth
CNBC Pro contributor Steve Grasso has purchased shares of Cloudflare, a cybersecurity and network services company, citing its superior growth rate and new opportunities from AI. Grasso notes Cloudflare's revenue grew 36% year-over-year to $696 million in the last quarter, outpacing competitors CrowdStrike and Zscaler. He highlights that existing customers are increasing spending by about 20%, and AI is creating new revenue streams, such as helping companies manage AI bot traffic and using OpenAI models for security. Despite the stock trading at a premium of 40 times sales and being up 68% year-to-date, Grasso believes momentum can continue, though he advises using stop orders to manage risk. The next catalyst is Cloudflare's third-quarter earnings report.
The article discusses a single investor's opinion on Cloudflare stock, not a major industry event. While it touches on AI trends in cybersecurity, it lacks broad industry impact.
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Key Takeaways & Evidence Grounding
- Cloudflare's revenue grew 36% year-over-year to $696 million in the last quarter.
- Cloudflare's stock is up about 68% this year and recently hit an all-time high.
- Cloudflare trades at roughly 40 times sales, higher than cybersecurity peers.
- Cloudflare uses OpenAI models to help customers find and fix code vulnerabilities.
- Existing Cloudflare customers are spending about 20% more than a year ago.
Connected Companies & Entities
4 Entities mapped“That is what I see in my latest buy, Cloudflare. The San Francisco-based company operates a global network that helps businesses improve the...”
“well ahead of cybersecurity competitors CrowdStrike and Zscaler, which have recently been growing in the mid-20% range.”
“performed faster than Zscaler and Palo Alto Networks.”
“performed faster than Zscaler and Palo Alto Networks.”
Ontology Mapping & Concepts
Related Market Signals & Shifts
Recent verified developments and strategic activity across this market segment.
Cloudflare Repositions as Agentic AI Play
Cloudflare (NET) is being re-priced by investors as more than a cybersecurity provider as management shifts the company toward agentic AI infrastructure. The firm reported reaccelerating growth (Q1 revenue and current RPO up 34%), guided full-year revenue to roughly $2.8 billion, and is pursuing an "agentic operating model" that includes a workforce reduction of about 1,100 employees. The stock recently cleared a $250 resistance level, with prior highs near $277 cited as potential upside. The article notes Cloudflare remains GAAP unprofitable but shows improving non‑GAAP operating income and free cash flow. As a tactical expression of the bullish view, the piece outlines an options trade: sell the Aug. 21, 2026 $260 / $230 put vertical for a $11.68 credit.
Cloudflare Soars 5% on AI Demand and Strong Earnings
Cloudflare reported Q4 adjusted earnings of $0.28 per share on $615 million revenue, topping Wall Street estimates, and issued upbeat guidance for Q1 and the full year as AI adoption drives demand for its networking and security services. CEO and co-founder Matthew Prince said the rise of AI and agentic tools is creating a "fundamental re-platforming" of the internet, with AI agents acting as new users that run on Cloudflare's platform. The company cited benefits from the viral open-source Moltbot (built on Anthropic’s Claude) and released its own Moltworker platform to securely run such agents. Revenue grew 34% year-over-year; Cloudflare ended 2025 with 4.5 million active human developers and its stock rose about 5% after the results.
Wall Street: AI Boosts Cybersecurity Stocks
Wall Street analysts are reframing AI as a tailwind for cybersecurity companies, citing increased demand for security as AI systems expand attack surfaces. Mizuho upgraded CrowdStrike to outperform and raised its price target to $520, citing healthy platform demand and strong AI security offerings. JPMorgan identified CrowdStrike and Palo Alto Networks as likely beneficiaries of threats tied to foundation models and agentic AI. The article notes partnerships such as Anthropic’s Project Glasswing (which named CrowdStrike and Palo Alto as partners) and highlights product and sales catalysts like CrowdStrike’s Falcon Flex and hyperscaler demand. Jim Cramer and his Investing Club hold both names (CrowdStrike rated strongly; Palo Alto rated a 3 to trim into strength). Stock moves and ETF exposures (IGV software ETF) suggest investor sentiment is shifting toward viewing AI as increasing security spend rather than stealing market share.
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