What happened?
Shares of cloud security and performance company Cloudflare (NYSE: NET) jumped 8.7% in the morning session after it extended the previous session's post-earnings gains as the company posted third-quarter results and lifted full-year guidance well above Wall Street projections.
The rebound follows a steep slide the previous week when Democratic midterm victories sparked fears of tighter legislative curbs on artificial-intelligence data centers and capital spending. In coverage by Reuters, Wall Street brokerages including Morgan Stanley and UBS characterized that sell-off as overdone, contending that extreme regulatory roadblocks to data-center developments are unlikely to play out.
Sector sentiment was further supported after JPMorgan upgraded SAP to overweight, with analyst Toby Ogg noting in research reported by CNBC that enterprise AI shifting from pilots to production favors established systems of record.
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What is the market telling us
Cloudflare’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 12% on the news that the company reported third-quarter financial results that exceeded analysts' expectations and raised its full-year outlook. According to a company press release, Cloudflare reported third-quarter revenue of $782.5 million vs S&P analysts’ estimates of $736.8 million (39.2% year-on-year growth, 6.2% beat). Cloudflare's adjusted earnings of 38 cents per share topped consensus expectations of 34 cents per share. For the fourth quarter of 2026, the company expects sales of $845.5 million at the midpoint for Q4 2026, above analyst estimates of $795.9 million. Additionally, Management raised its full-year adjusted EPS guidance to $1.35 at the midpoint, a 7.6% increase. Cloudflare's raised guidance is underpinned by management's view that the company's platform is well positioned for continued adoption in an environment increasingly shaped by AI-driven workloads and evolving internet security needs.
Cloudflare is up 50.5% since the beginning of the year, but at $295.27 per share, it is still trading 18.2% below its 52-week high of $360.93 from October 2026. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $1,442.
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