Cloudflare, one of the leading companies in web performance and security solutions, has caught the attention of analysts with its strong growth potential despite recent setbacks. On Wednesday, Cloudflare shares rose by 2.2% after receiving a significant upgrade from BTIG analyst Gray Powell, moving from ‘Neutral’ to ‘Buy’ status with a price target of $199.
Strong Market Momentum Across Key Segments
Powell’s confidence in Cloudflare stems from extensive research conducted with five major partners, collectively representing over $100 million in annual sales. The findings highlighted several promising growth areas:
- Web Application Protection: This continues to be a core pillar of Cloudflare’s success, providing reliable protection for websites and applications against cyber threats.
- Zero Trust and SASE (Secure Access Service Edge): Both segments have shown rapid adoption and increasing market share, providing organizations with robust and scalable security frameworks.
- Developer Services: A budding growth driver, developer-focused solutions are gaining traction, showing accelerating momentum through 2025 and into 2026.
Revenue Growth Forecast: Sustained High 20% Through 2028
According to Powell, Cloudflare is well-positioned to maintain revenue growth in the high 20% range for the foreseeable future, up to 2028. This projection is rooted in detailed product-level analysis and partner feedback. The company is expected to solidify its position as a leader in cloud-based services thanks to its focus on innovation and a growing portfolio.
Current Valuation and Market Challenges
Cloudflare stock has faced headwinds recently, with a 33% decline since November 2025. This drop outpaced the broader software sector’s 26% decline and the 22% average drop experienced by BTIG’s security coverage universe. Currently, Cloudflare trades at 18.8x CY27E EV/sales, compared to a 9.1x average among high-growth peers. While this valuation gap raises concerns, Powell argues that the selloff presents an attractive entry point for long-term investors.
Upcoming Earnings Report as a Potential Catalyst
All eyes are on Cloudflare’s upcoming Q4 earnings report, scheduled for February 10, 2026. Powell anticipates strong results, reinforcing the feedback from key partners and the company’s strategic momentum. Investors seeking opportunities in the cloud security space should watch closely for further updates.
The Role of AI in Cloudflare’s Growth Strategy
Interestingly, while many sectors face concerns about artificial intelligence disrupting traditional business models, Cloudflare could benefit from AI-driven tailwinds. The company’s innovation in AI-powered solutions may provide further growth opportunities, positioning it uniquely within the software industry.
Interested in Exploring More?
If you’re intrigued by Cloudflare’s offerings in the security and performance space, consider trying their WAF (Web Application Firewall) solution. It provides paramount web application protection, making it a reliable choice for businesses of all sizes.
