Key Takeaways
- Piper Sandler initiated Overweight coverage on Cloudflare (NET) from Neutral on April 15, 2026
- Price target established at $222, representing upside from the $178.65 trading level
- Shares climbed approximately 5% during Wednesday’s afternoon session
- Revenue projections reach $2.79B for 2026 and $3.6B for 2027, maintaining ~30% expansion
- Strategic collaborations with OpenAI and Anthropic highlighted as catalysts for expansion
Piper Sandler elevated Cloudflare (NET) to Overweight from Neutral on Wednesday, triggering a 5% gain in shares during the afternoon session.
The investment bank established a $222 price objective, representing approximately 24% potential upside from the $178.65 trading level.
This rating change comes after a challenging period for the shares. NET had declined 15.4% during the previous week, creating what Piper Sandler identified as an attractive entry point.
Over a 12-month timeframe, the stock has advanced 64%.
Piper Sandler’s bullish stance centers on Cloudflare’s strategic position across numerous expansion opportunities — including content delivery, application security, networking-as-a-service, SASE, infrastructure, and AI-as-a-service.
The firm has maintained a positive long-term view on Cloudflare. Analysts believe the infrastructure environment is evolving in ways that align with Cloudflare’s core competencies.
Piper Sandler referenced promising early Q1 2026 metrics, highlighting accelerating website expansion, growing market penetration, and robust demand for security and networking solutions.
The firm anticipates Cloudflare will confirm its 2026 outlook during the upcoming earnings release.
Strategic AI Alliances and Edge Infrastructure Support Growth Thesis
Cloudflare’s expanding presence in AI infrastructure forms a substantial portion of the investment thesis. Edge computing — which positions AI processing nearer to users — represents an increasing market segment where Cloudflare holds competitive advantages.
The company maintains direct collaborations with OpenAI and Anthropic, positioning it favorably as AI workloads expand across caching, security, and application delivery functions.
Piper Sandler characterized the company’s approach as a “true platform strategy,” with robust large language model partnerships expected to generate compounding returns.
Revenue expansion reached 30% in the most recent period, accompanied by a 75% gross profit margin — metrics that reinforce the long-term investment case.
The firm forecasts revenue reaching approximately $2.79 billion in 2026, advancing to $3.6B in 2027, with earnings per share showing consistent growth throughout both periods.
New Product Rollouts Strengthen Competitive Position
Cloudflare has maintained an aggressive product development schedule. The company recently unveiled Cloudflare Mesh, a private networking solution engineered to connect AI agents and infrastructure while maintaining isolation from public internet exposure.
The company also broadened its Agent Cloud platform to support developers in building and deploying AI agents at scale, while introducing Dynamic Workers, an isolate-based runtime enabling rapid execution of AI-generated code.
A collaboration with Wiz, integrated with Google Cloud, was announced to enhance security for AI applications, providing security teams with advanced capabilities to safeguard AI-powered workloads.
TD Cowen separately reaffirmed its Buy rating on NET with a $265 price objective, projecting 30% year-over-year revenue growth for Q1 2026.
Piper Sandler acknowledged that the valuation remains elevated compared to industry peers, making sustained growth in the high-20s range essential for justifying current multiples.
RPO growth and coverage metrics provide the firm with confidence that Cloudflare can achieve these performance benchmarks.
