NET Should I Buy
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Cloudflare Inc (NET) is not a strong buy at the moment for a beginner investor with a long-term horizon. While the company shows strong revenue growth and positive analyst sentiment, the lack of immediate trading signals, bearish technical indicators, and declining profitability metrics suggest waiting for a more favorable entry point.
The technical indicators are bearish. The MACD is below zero and negatively contracting, RSI is neutral at 47.152, and moving averages indicate a bearish trend (SMA_200 > SMA_20 > SMA_5). The stock is trading below the pivot level of 180.376, with key support at 164.015 and resistance at 196.738.
Strong revenue growth of 33.6% YoY in Q4
Analysts have raised price targets, with many maintaining Buy ratings, citing robust Q4 performance and AI-related growth potential.
Elevated demand for AI infrastructure and positive traction with large customers.
Declining profitability metrics: Net income dropped by 6% YoY, EPS fell by 25%, and gross margin decreased by 3.57%.
Bearish technical indicators and pre-market price decline (-0.03%).
No significant hedge fund or insider activity indicating strong confidence.
In Q4 2025, Cloudflare's revenue increased by 33.6% YoY to $614.5 million, showcasing strong top-line growth. However, net income dropped to -$12.08 million (-6% YoY), and EPS fell to -0.03 (-25% YoY). Gross margin also declined to 73.64%, down 3.57% YoY, indicating rising costs.
Analysts are generally positive on Cloudflare, with multiple upgrades and raised price targets. DZ Bank upgraded the stock to Buy with a $215 target, while Citi and BTIG raised targets to $265 and $243, respectively, citing strong Q4 results and AI-related growth potential. However, some firms like Susquehanna and Morgan Stanley lowered targets while maintaining neutral or overweight ratings.
