Cloudflare (NYSE:NET) shares rose almost 8% on Friday after the content delivery company reported strong second-quarter results and raised its full-year guidance, prompting investment firm Baird to say the company is “back to familiar territory.”
Analyst Shrenik Kothari, who has an outperform rating on Cloudflare (NET), said the “qualitative tone” seems to be optimistic, with the macro and demand showing signs of stabilization.
“We view FY-guidance as conservative, assuming no macro improvements, but comps get easier and there’s potential for numbers to accelerate in [the second-half],” Kothari wrote in an investor note.
Kothari also pointed out that Cloudflare (NET) is making “meaningful traction” on generative artificial intelligence, as two companies have signed “substantial” contracts, including one for a one-year deal worth $1.7M.
“NET believes it is the most widely used cloud provider among AI startups, particularly in the inferencing part of the market,” Kothari added.