NET 2Q25:The Default Infrastructure for AI-Native Companies

Cloudflare is the first cybersecurity company we are covering this quarter, but in reality, its business has already expanded beyond the boundaries of traditional security products and is evolving toward becoming a cloud provider built on a distributed network architecture

Most importantly, we see exceptionally strong and highly certain demand from AI-native companies for Cloudflare’s products—particularly its network-related offerings. This sets Cloudflare apart from many other publicly traded companies in the GenAI technology stack, whose products often face more fragmented adoption

For example, in compute, AI-native companies can choose between CSP offerings or alternatives like CoreWeave and Lambda. In databases, they might use Databricks or Snowflake, but open-source options like PostgreSQL still command a significant share. In monitoring, they can go with Datadog (DDOG) or opt for open-source tools like Grafana

By contrast, the selection of Cloudflare’s network solutions tends to be far more exclusive. This unique positioning—serving a fast-growing segment and often being the default choice for AI-native companies—creates substantial long-term growth opportunities for Cloudflare

Looking across its business, Cloudflare’s overall product line has evolved from its origins on the network side to add security (SaaS), compute (Workers with GPU), storage (Workers R2), and PaaS capabilities—continuing to advance the “fourth cloud” concept

Through this process, the company is steadily building a horizontally expanding platform business, with a constantly growing TAM. On the go-to-market side, large enterprise sales force expansion and channel reforms are progressing in tandem with product rollouts, with positive momentum