Cloudflare, Inc.

New York Stock Exchange
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Somewhat Bullish +45

Jim Cramer Calls Akamai (AKAM) “Terrific” and Cloudflare (NET) One of His Favorites

AI-generated analysis

📈 Cloudflare (NET) reported second-quarter revenue growth of 36% year-over-year, reaching $696.1 million.

💼 The company signed significant multiyear contracts and expects full-year 2026 revenue between $2.864 billion and $2.870 billion.

📉 Cloudflare posted a GAAP operating loss of $205.7 million in the second quarter while remaining unprofitable on that basis.

💰 The stock trades at a high valuation with a P/E ratio of 246x based on next year's earnings estimates.

📊 Current remaining performance obligations grew by 35%, indicating strong future revenue visibility.

🏦 Hedge fund ownership increased to 87 holders in Q2, up from 84 in the previous quarter.

⚠️ Short interest is low at roughly 2.1% to 2.3% of the float, suggesting limited bearish positioning.

🗣️ Jim Cramer identified Cloudflare as one of his favorite stocks due to its position in cybersecurity and cloud infrastructure.

🔋 The company faces execution risks regarding power and space constraints similar to peers like Akamai.

Bullish Signals
  • Cloudflare achieved a robust 36% year-over-year revenue increase in the second quarter, reaching $696.1 million.
  • Current remaining performance obligations grew by 35%, signaling strong pipeline and future revenue visibility.
  • The company provided confident full-year 2026 guidance with expected revenue between $2.864 billion and $2.870 billion.
  • Non-GAAP operating income is projected to reach $443 million to $445 million for the full year 2026.
  • Hedge fund ownership increased to 87 holders in Q2, reflecting growing institutional interest.
  • Short interest remains low at roughly 2.1% to 2.3% of the float, indicating limited bearish sentiment.
Risk Factors
  • Cloudflare reported a significant GAAP operating loss of $205.7 million in the second quarter.
  • The stock trades at an elevated P/E ratio of 246x next year's earnings, creating high valuation risk.
  • Continued strong growth and progress toward GAAP profitability are required to support the current expensive multiple.
  • The company faces execution risks related to power and space constraints that could limit near-term expansion.
Full Analysis
Jim Cramer highlighted Cloudflare (NET) as one of his favorite stocks during a segment on Mad Money, noting that both it and Akamai are benefiting from rising demand for cybersecurity and cloud infrastructure. However, the article emphasizes that their financial profiles differ significantly, with Cloudflare growing much faster but trading at a far higher valuation compared to its peers. Cloudflare reported strong second-quarter results with revenue increasing 36% year-over-year to $696.1 million, driven by robust growth in current remaining performance obligations which rose 35%. The company provided full-year 2026 guidance expecting revenue between $2.864 billion and $2.870 billion, alongside non-GAAP operating income of $443 million to $445 million. Despite its rapid expansion, Cloudflare remains unprofitable on a GAAP basis, reporting an operating loss of $205.7 million in the second quarter. The stock trades at a P/E ratio of 246x next year's earnings, creating a valuation risk that requires continued strong growth and progress toward GAAP profitability to justify its current price. Institutional sentiment shows mixed signals with hedge fund holders increasing for Cloudflare while short interest remains low at roughly 2.1% to 2.3% of the float. Analysts caution that the bear case centers on execution risks and whether the company can sustain its high growth trajectory to support its expensive multiple.