Shares of Cloudflare, Inc. (NET) surged approximately 14% in premarket trading on Wednesday, February 11, 2026, following the release of a robust financial outlook that exceeded Wall Street expectations. The stock was indicated at $205.50, representing a significant gain of $25.52 from Tuesday's closing price of $179.98. This premarket momentum was fueled by the company's strong fourth-quarter 2025 results and an optimistic revenue forecast for fiscal year 2026, which management attributed to accelerating demand for artificial intelligence (AI) agent infrastructure and several key enterprise agreements.
Financial Performance and Forward Guidance
For the fourth quarter, Cloudflare reported revenue of $614.5 million, a substantial increase of 33.6% year-over-year. The company posted a GAAP net loss of $12.1 million, while non-GAAP earnings came in at $0.28 per share. Looking ahead, management provided first-quarter 2026 revenue guidance in the range of $620 million to $621 million. More notably, the full-year 2026 revenue forecast was set between $2.785 billion and $2.795 billion, surpassing analyst consensus estimates and signaling continued strong growth.
On the profitability front, Cloudflare generated $99.4 million in free cash flow for the quarter, representing 16.2% of revenue. The company ended the period with a strong balance sheet, holding $4.1 billion in cash, cash equivalents, and marketable securities. However, the earnings outlook presented a mixed picture. The company projected adjusted earnings per share of approximately $0.23 for Q1 2026, slightly below the $0.25 consensus, and full-year adjusted EPS guidance of $1.11 to $1.12, which trailed the analyst consensus of about $1.19.
The AI-Driven Growth Narrative
During the earnings call, CEO Matthew Prince emphasized the strategic importance of AI agents as the next major driver of internet traffic. He positioned Cloudflare as the essential platform and secure routing network for these emerging AI workloads, stating that if AI agents are the new users of the internet, Cloudflare is the infrastructure they will rely on. This vision is being realized through increased customer adoption of the company's Workers developer platform for building AI-powered projects.
The positive outlook arrives after a challenging start to the year for the stock, which had declined over 8% in 2026 prior to this report, despite an impressive 83% rally in 2025. The company also faced scrutiny following a significant service outage in November 2025 that impacted major platforms like X and ChatGPT, highlighting the critical—and sometimes fragile—role of edge infrastructure in the modern digital economy. The strong quarterly results and guidance appear to have reassured investors about the company's growth trajectory and operational reliability.
Analyst Reactions and Market Context
The earnings report prompted immediate analyst action. Baird upgraded Cloudflare from "neutral" to "outperform" and raised its price target to $260 from $230. In a post-earnings note, Bank of America characterized the quarter as a "record 4Q, record year, continued acceleration into FY26." The market's focus now shifts to whether the premarket gains will hold through the regular trading session, as extended-hours movements can often reverse when broader market participation begins.
Investors are closely watching Cloudflare's ability to balance aggressive growth investments with margin protection, especially as it builds capacity to meet rising AI-driven demand. The company operates in the competitive edge-network and content-delivery space alongside peers like Fastly (FSLY) and Akamai (AKAM). This sector is often viewed as a proxy for broader trends in web traffic, application security spending, and developer-driven innovation. The upcoming earnings calendar for these peers may influence trading sentiment, with Fastly scheduled to report its Q4 results after the close on February 11, and Akamai's quarterly call set for February 19.
In a separate corporate development, an SEC filing indicated that Chief Legal Officer Doug Kramer will transition from his role at the end of March, moving into a senior advisor position. Deputy Chief Legal Officer Alissa Starzak has been named as his successor. For traders, the key watchpoints at the open include the sustainability of the premarket rally, volume trends, and any commentary from management or analysts that could further clarify the path for AI-related revenue growth and the company's competitive positioning in the evolving infrastructure landscape.
