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Cloudflare, Inc. (NYSE: NET) traded at $201.65, up 2.26%, after Barclays initiated coverage of the company with an Overweight rating and a $235 price target. The stock also rose about 3% during premarket trading as investors embraced the bullish call.

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Barclays analysts expressed confidence in Cloudflare’s long-term trajectory, citing the strength of its global network, expanding product ecosystem and rising demand across AI, cloud security and next-generation internet services.

Barclays Highlights Cloudflare’s Expanding Network Advantage

Barclays analyst Saket Kalia and his team pointed to Cloudflare’s homogeneous global network as a core competitive advantage. They noted the network supports roughly 20% of the entire internet, allowing the company to run any service on any server at any time. Cloudflare organizes its offerings into four “Acts,” each representing a suite of products aligned with major industry trends such as cybersecurity, AI inference, cloud infrastructure and instant search experiences.

$NET | 𝐂𝐥𝐨𝐮𝐝𝐟𝐥𝐚𝐫𝐞: Barclays initiates Overweight, sets 𝐏𝐓 𝐚𝐭 $𝟐𝟑𝟓

Analyst sees 30% growth potential across product "Acts," driven by cloud, AI, and cybersecurity tailwinds. pic.twitter.com/VnjGsm4a91

— Hardik Shah (@AIStockSavvy) December 2, 2025

This architecture enables Cloudflare to deploy new services without the constraints of legacy data center models. Analysts believe this flexibility positions the company to capture spending across multiple fast-growing technology categories.

Revenue Mix Shifts as New Segments Scale Faster

Barclays estimates that Act 1 accounted for nearly 85% of FY2024 revenue, while Acts 2 and 3 contributed the remaining 15%. Although Act 1 remains the company’s largest revenue source, growth in Acts 2 and 3 is accelerating quickly. These segments represent large addressable markets and are expanding at healthy rates as Cloudflare gains share in enterprise security and performance solutions.

The analysts emphasized that Cloudflare’s ability to scale newer business lines signals long-term revenue durability. As the product mix shifts, the company’s recurring revenue base is expected to become more diversified and higher margin.

Strong Multi-Year Growth Forecast

Barclays said Cloudflare’s medium-term targets imply 27% to 30% annual growth through FY2028, a pace that stands out in the current software landscape. The firm expects this expansion to be fueled by market share gains across the company’s product “Acts” and continued adoption of its pool-of-funds contracts. Analysts noted that premium valuations across fast-growing cloud names reflect the scarcity of companies able to sustain 30% growth at scale.

They also highlighted room for improved EBIT margins in the future, though Cloudflare is primarily focused on maintaining its growth rate under the Rule of 40, a benchmark combining revenue growth and profit margin to measure operational efficiency.

Cloudflare’s Performance vs. Broader Market

Cloudflare’s trailing total returns show a pattern of strong multi-year outperformance relative to the S&P 500. As of December 2, 2025:

• YTD Return: NET 87.42% vs. S&P 500 16.24%
• 1-Year Return: NET 92.11% vs. S&P 500 13.06%
• 3-Year Return: NET 317.22% vs. S&P 500 67.91%
• 5-Year Return: NET 180.68% vs. S&P 500 86.34%

The three-year return stands out as Cloudflare benefited from rising cybersecurity demand, increased cloud adoption and a surge in AI-driven workloads.

Investor Outlook

Barclays’ initiation reinforces market optimism surrounding Cloudflare’s ability to scale multiple business lines in parallel. Strong network capabilities, rapid expansion in new product Acts and durable long-term growth expectations support the bullish stance.

With the stock already reflecting enthusiasm for high-growth software names, investors will watch upcoming quarters for signs that Cloudflare continues to meet its ambitious growth and efficiency targets.

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