Cloudflare Stock Rises 43% in a Year: Will the Rally Continue?

Stock Performance - Cloudflare (NET) shares surged 43.1% over the past year, outperforming the Zacks Computer and Technology sector (33.1%) and the S&P 500 (25%) [1] - The stock also outperformed industry peers such as CrowdStrike (CRWD), DataDog (DDOG), and Fastly (FSLY) [1] Financial Performance - Cloudflare reported third-quarter 2024 non-GAAP earnings of 20 cents per share, a 29.4% year-over-year increase [4] - Third-quarter revenues reached $430.1 million, a 28.2$451.80 million, with a year-over-year growth estimate of 24.65% [7] - Q1 2025 sales are estimated at $471.32 million, with a 24.49$1.66 billion, a 28.12% increase from the previous year [7] - EPS estimates for Q4 2024 are $0.18, with a 20$0.74, a 51.02% increase from the previous year [7] Product Innovation and Partnerships - Cloudflare has integrated artificial intelligence (AI) into its solutions, launching numerous AI-based products [5] - The company has collaborated with major AI players such as NVIDIA and Microsoft, strengthening its portfolio and strategic partnerships [5] Customer Base - Cloudflare secured 219 large customers paying over $100,000 annually in Q3 2024 [12] - The company serves 35% of Fortune 500 companies, reflecting a high-quality and prestigious customer base [12] Valuation Concerns - Cloudflare is trading at a forward 12-month P/S ratio of 19.04, significantly higher than the Zacks Internet – Software industry average of 3.02 [9] - The premium valuation raises concerns about the stock's sustainability and potential downward risk [9]