Cloudflare shares jump after forecast raise on AI-driven demand

Aug 7 (Reuters) - Cloudflare shares ‌rose before ​the ​bell on Friday after the cloud services firm raised its annual forecasts, betting that resilient AI-driven demand will ‌sustain traffic across its network.

Quarterly results of Cloudflare, whose ⁠shares were last up 16.2% at $330.51, follow Amazon.com's strongest cloud growth in ‌more than four years. Amazon ‌noted that it won't have enough capacity to meet all demand in 2026.

The two reports underscore that software companies remain ​key winners of the ongoing scramble to build AI infrastructure.

Cloudflare now expects full-year revenue of $2.86 billion to $2.87 billion, up from ⁠its prior expectation of $2.805 billion to $2.813 billion. The new forecast, released after markets closed ​on Thursday, exceeds analysts' average estimate of $2.81 billion, according to LSEG-compiled data.

Analysts at Morgan Stanley said the ​company's Workers developer platform was its ‌fastest-growing segment, amid a shift toward a usage-based model, expecting the company to exceed its outlook.

Cloudflare's also ⁠increased its adjusted per share earnings forecast to a range of $1.25 to $1.26 from its earlier estimate of $1.19 to $1.20.

Analysts also highlight that Cloudflare stands ⁠to benefit as cybersecurity becomes more necessary as cutting-edge AI models reshape ​the cyber-risk landscape.

Cloudflare shares have gained over 44% so far this year, compared with a near-77% rise in rival CrowdStrike and a 95% jump in ‌Palo Alto Networks. The stock trades at over 190 times its forward price-to-earnings ratio, compared with ‌over 145 for CrowdStrike, according to LSEG-compiled data.

The company, analysts at ⁠RBC Capital Markets note, "has ‌multiple, durable avenues to ​AI-monetization over the long-to-medium term that warrants a premium valuation."

(Reporting by Purvi Agarwal in Bengaluru; Editing by ‌Joyjeet Das)

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