What Happened?

Shares of cloud security and performance company Cloudflare (NYSE: NET) jumped 13.9% in the morning session after the viral emergence of open-source AI assistants validated the company's role in agentic AI infrastructure. 

These open-source AI assistants captured the imagination of the tech world and validated Cloudflare’s infrastructure as the backbone for the next generation of agentic AI. Investors took note when RBC Capital maintained an Outperform rating with a $265 target, explicitly linking the rally to these surging AI workloads rather than traditional web traffic. 

The market realized that as AI agents moved to the edge, requiring secure and local deployment via tools like Cloudflare Tunnels, the company was no longer just a security firm but a critical utility for autonomous digital workers.

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What Is The Market Telling Us

Cloudflare’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for Cloudflare and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 10.1% on the news that TD Cowen reiterated a Buy rating and a $265 price target, pointing to healthy security demand and recent strategic moves. 

The firm noted that Cloudflare's platform was expanding through several acquisitions. Specifically, Cloudflare acquired Human Native, an AI data marketplace, and the team behind the Astro web framework. These acquisitions were seen as strengthening the company's market position. Additionally, Cloudflare recently expanded its partnership with JD Cloud to create a global platform for AI inference workloads, signaling a deeper push into the artificial intelligence sector. The combination of a positive analyst outlook and strategic growth initiatives appeared to fuel investor optimism. 

Beyond security and standard inference, market sentiment further reflected the adoption of Cloudflare's infrastructure for agentic AI. Analysts continued to assess this as an expansion into high-growth AI middleware. However, the long-term financial impact remains contingent on broader enterprise adoption rates and the transition to fully autonomous AI workflows.

Cloudflare is up 9.9% since the beginning of the year, but at $215.44 per share, it is still trading 14.9% below its 52-week high of $253.30 from October 2025. Investors who bought $1,000 worth of Cloudflare’s shares 5 years ago would now be looking at an investment worth $2,889.

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