Workers AI, partnerships could be long-term tailwind for Cloudflare, says RBC

RBC Capital notes that as part of Cloudflare’s (NET) Birthday Week, the company made several important announcements that should help accelerate the company’s AI strategy, starting with Workers AI, a serverless AI platform as well as several partnerships including Microsoft (MSFT), Nvidia (NVDA), Meta (META), Databricks, and Hugging Face. Overall, the firm believes Cloudflare’s Birthday Week announcements are important in positioning the company as a leading landing spot for AI developers and AI workloads. As such, RBC views the new products, most notably Workers AI as well as expanded partnerships with leading AI technology providers as key components of Cloudflare’s focus on GenAI. While bullish, the firm doesn’t anticipate these announcements to drive significant incremental growth in the near-term due to the company’s ratable revenue model, but believes they could represent a meaningful long-term tailwind. RBC believes this could drive adoption and usage of the Workers platform and make Cloudflare more of a landing spot for GenAI workloads. The firm has an Outperform rating on Cloudflare’s shares with a price target of $75.