As previously reported, Oppenheimer analyst Timothy Horan upgraded Cloudflare to Outperform from Perform with an $85 price target. The firm thinks the company is well-positioned to offer edge compute at scale, consolidating compute/security/networking on one infrastructure enabling one common developer platform. It is also deploying AI infrastructure on this platform called Workers AI and is partnering with some of the largest technology companies. Its Workers AI platform is not even two months old and is already seeing strong demand and interesting new user cases, both small startups/developers and large enterprises, Oppenheimer adds. Gross margins and free cash flow compression remain near-term concerns, but the company has a long revenue ramp that should be reinforced by durable AI tailwinds, the firm argues.
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