Shares of Cloudflare (NET) surged on Tuesday after Scotiabank upgraded the cloud infrastructure and cybersecurity company, raising its rating from Sector Perform to Sector Outperform and lifting the price target to $300 from $225. The stock gapped up at the open, trading as high as $259.17, a roughly 4.7% increase from the previous close of $247.55, and ultimately climbed 7% on the day.
Scotiabank analyst Patrick Colville outlined four key catalysts behind the optimistic call. First, Cloudflare Workers is emerging as the default infrastructure for AI-coded applications, including platforms like OpenAI Codex Sites and Lovable, a trend he believes is underappreciated by investors. Second, AI-driven traffic trends are inflecting — historical patterns show that traffic growth leads revenue by about three quarters, and the current rise from agentic AI could allow Cloudflare to beat consensus estimates by approximately five percentage points in the second half of 2026.
Third, Cloudflare is attracting top-tier AI-native customers, validating its architecture and providing a long growth runway. Fourth, earlier concerns about enterprise deals have eased following positive field checks with CIOs and CISOs on Cloudflare’s SASE and edge compute products. Colville’s upgrade makes Scotiabank the most bullish on Wall Street for NET.
Not all analysts share the enthusiasm. Weiss Ratings maintains a Sell, while Cantor Fitzgerald and Susquehanna have Neutral ratings with lower price targets. Overall, 22 analysts rate the stock a Buy, six Hold, and three Sell, with an average target of $244.23. Cloudflare’s last quarterly report (Q1 2026) showed EPS of $0.25 on revenue of $639.75 million, both beating estimates and reflecting 33.5% year-over-year growth. The company guided FY2026 EPS at $1.19–$1.20.
Meanwhile, institutional ownership stands at 82.68%, with Norges Bank initiating a $718 million position and Jennison Associates boosting its stake by 135.8% to around $906 million. Insiders, however, have sold about $149 million in stock over the past 90 days, including planned sales by co-founder Michelle Zatlyn and CFO Thomas Seifert.
