Key Highlights
- Shares of Cloudflare surged more than 10% on September 9 following Meta’s announcement of its Muse AI agent
- The Muse platform is projected to significantly boost agentic web traffic, creating strong tailwinds for Cloudflare’s edge computing business
- On September 3, Cloudflare unveiled a new AI-driven security offering powered by OpenAI’s GPT-5.6 Cyber model
- Second quarter revenue reached $696.1 million, representing 35.9% growth versus the prior year, while adjusted EPS of $0.29 exceeded expectations
- The company increased its full-year revenue and earnings per share outlook based on robust quarterly performance
Shares of Cloudflare (NET) rocketed higher by more than 10% during trading on September 9, finishing the session at $314.18. The sharp rally reflected investor optimism that the company stands to gain significantly from Meta Platforms’ introduction of its Muse personalized AI agent.
On September 8, Meta CEO Mark Zuckerberg introduced Muse to the public. This AI agent has been engineered to safely handle routine consumer tasks while operating within a sandboxed Linux environment complete with dedicated browser, processing power, memory allocation, and storage.
With Meta’s ecosystem reaching 3.6 billion daily active users worldwide, even modest adoption rates for Muse could trigger substantial increases in web traffic volume. Cloudflare’s infrastructure is perfectly positioned to capture this surge.
The company specializes in distributed edge infrastructure that handles routing, security, and optimization for internet traffic. An uptick in AI agent activity directly translates to increased demand for Cloudflare’s core services.
This isn’t the first collaboration between these tech giants. In 2025, Meta integrated its Llama open-source language model into Cloudflare’s Workers AI platform to enable localized AI inference capabilities.
During the previous earnings call, Cloudflare CEO Matthew Prince revealed a milestone: for the first time ever, non-human agentic traffic accounted for more than half of all network activity. This proportion appears poised for further expansion.
Additionally, Cloudflare recently introduced Wallet, a solution designed to facilitate secure payment transactions between AI agents and online merchants. The Muse platform is anticipated to leverage this functionality.
OpenAI Collaboration Provides Additional Upside
The positive momentum from Muse wasn’t the sole driver for Cloudflare shares this week. On September 3, the company introduced “Vulnerability Discovery and Remediation,” a newly integrated feature within its Managed Defense offering.
This innovative tool leverages OpenAI’s GPT-5.6 Cyber model to autonomously identify, verify, and recommend solutions for security vulnerabilities in software. The system analyzes codebases alongside live traffic intelligence from Cloudflare’s worldwide network, enabling it to implement tailored firewall rules while generating code patches for development teams.
Solid Financial Performance Reinforces Bullish Thesis
Cloudflare’s second quarter financial results provided further justification for investor enthusiasm. The company posted revenue of $696.1 million, marking a 35.9% increase compared to the same period last year. Adjusted earnings per share reached $0.29, surpassing analyst projections. Billings climbed 34.8% to $753.5 million.
While GAAP operating margins faced headwinds from a non-recurring impairment charge, the underlying business demonstrated clear strength.
Following these impressive results, management upgraded its full-year revenue and adjusted earnings per share projections.
Year-to-date, the stock has climbed 59.1% and was approaching its 52-week peak of $332.22 prior to the latest session.
Currently trading at approximately 40 times sales and 114 times forward earnings, the valuation reflects a significant premium. However, Cloudflare has historically commanded elevated multiples throughout its tenure as a publicly traded entity.
The company has experienced 35 trading sessions with moves exceeding 5% over the past twelve months, though a single-day gain of 10% remains relatively uncommon even for this volatile stock.
With shares at $314.18, Cloudflare is trading within striking distance of its 52-week high of $332.22.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
