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Investing.com -- Cloud infrastructure firm Cloudflare shares jumped 5% during afternoon trading hours on Wednesday as Piper Sandler said that firm’s artificial intelligence adoption will lead to growth opportunities.
The brokerage upgraded the stock to an “Overweight” rating, citing strong growth prospects driven by AI adoption and expanding market opportunities.
The brokerage set a price target of $222, implying upside from the current trading level of $178.65. The upgrade reflects growing confidence in Cloudflare’s position as a key player in next-generation internet infrastructure, particularly in edge computing and AI services.
Piper Sandler forecasts Cloudflare’s revenue to reach approximately $2.79 billion in 2026 and $3.6 billion in 2027, supported by sustained growth rates near 30%. Earnings per share are also expected to rise steadily over the same period.
Analysts highlighted solid early indicators for the first quarter of 2026, including accelerating website growth, increasing market share, and strong demand across security and networking products.
A key driver behind the upgrade is Cloudflare’s growing role in AI infrastructure. The company is benefiting from rising demand for edge-based computing, which allows AI applications to run closer to users, improving speed and efficiency.
Cloudflare’s partnerships with major AI players, including OpenAI and Anthropic, further strengthen its position. Analysts believe the company will gain from increased AI workloads, including caching, security, and application delivery services.
The report points to rapid growth in the edge-cloud market, expected to expand significantly over the coming years. Cloudflare is seen as well-positioned to capture market share due to its integrated platform spanning delivery, security, networking, and AI services.
Despite optimism, analysts caution that Cloudflare’s valuation remains high relative to peers, and the company must sustain strong growth to justify it. Other risks include competition, customer retention challenges, and execution in newer product areas.