-- Cloudflare (NET) stands to gain from the growing sophistication of frontier AI models and the exponential growth of agentic AI, and the recent stock price drop is a "tactical buying opportunity," Oppenheimer said in a Friday note.
The 8.6% stock price drop on Thursday was mainly due to concerns that Project Glasswing, a cross-industry coalition using Anthropic's unreleased model Claude Mythos, would negatively affect security providers not included in the initiative, such as Cloudflare, Oppenheimer analysts said.
The analysts countered this by emphasizing that the company's security sales are tied to its physical network, which is necessary to route data traffic.
Cloudflare stands to benefit from the boom in agentic AI, with the company handling roughly one-fifth of worldwide internet traffic volume, according to the note.
Agentic AI is expected to drive data traffic growth at a compound annual growth rate of over 20%, the analysts said.
Combined with an anticipated boost in add-on revenue from security and compute products, agentic AI is estimated to increase revenue by 1.3 times, the analysts said.
Oppenheimer maintained its outperform rating on the company's stock and a price target of $300.
Price: $165.82, Change: $-27.24, Percent Change: -14.11%