Cloudflare (NET) Stock Gaps Up as Scotiabank Calls AI Traffic a Game-Changer

TLDR

• Scotiabank upgraded Cloudflare (NET) from Sector Perform to Sector Outperform, lifting its price target from $225 to $300.
• The stock gapped up on Tuesday, opening at $259.17 after closing at $247.55 the previous session — a move of roughly 4.7%.
• Analyst Patrick Colville cited AI traffic trends, Cloudflare Workers adoption, and enterprise wins as key drivers for the upgrade.
• Overall analyst consensus remains Moderate Buy, with an average price target of $244.23 across 31 analysts.
• Institutional investors hold 82.68% of NET stock, with several major funds adding to their positions in recent quarters.

Cloudflare gapped up on Tuesday morning after Scotiabank upgraded the stock and set a new price target of $300 — the highest on Wall Street for the company. NET opened at $259.17, up from a prior close of $247.55.

Cloudflare, Inc., NET

The stock traded at $256.82 during morning hours on volume of around 426,000.

Scotiabank analyst Patrick Colville issued the upgrade, moving his rating from Sector Perform to Sector Outperform. He raised his price target from $225 to $300.

Colville said he spent more than four weeks doing a deeper dive into Cloudflare before making the call.

His note to clients pointed to four reasons for the change. First, he said Cloudflare Workers is becoming the default infrastructure for AI-coded applications, including those built on OpenAI Codex Sites and Lovable.

Second, he flagged a turn in traffic trends. He said traffic typically leads revenue by three quarters, and that the current inflection from agentic AI could help Cloudflare beat and raise Street estimates by around five percentage points in the second half of 2026.

Third, Colville said Cloudflare is winning AI-native customers at the high end, which he sees as validation of its architecture. Fourth, he said his earlier concerns about enterprise deals have eased following fieldwork with CIOs and CISOs on Cloudflare’s SASE and edge compute products.

Mixed Analyst Picture

Not everyone is as bullish. Weiss Ratings has a Sell rating on NET. Cantor Fitzgerald and Susquehanna both carry Neutral ratings, with price targets of $230 and $200 respectively.

On the positive side, Piper Sandler holds an Overweight rating. Zacks recently moved from Strong Sell to Hold. In total, 22 analysts rate the stock a Buy, six have Hold ratings, and three have Sell ratings. The average price target across the group sits at $244.23 — well below Scotiabank’s new $300 target.

NET’s last earnings report, released May 7, showed Q1 2026 EPS of $0.25, beating consensus by $0.02. Revenue came in at $639.75 million, ahead of the $620.83 million estimate. That was 33.5% growth year over year.

Insider Sales, Institutional Buying

On the insider side, Co-founder Michelle Zatlyn sold 25,641 shares on June 18 at an average of $219.11, for a total of around $5.6 million. CFO Thomas Seifert sold 10,000 shares on June 17 at $232.39, totalling around $2.3 million. Both sales were executed under pre-arranged Rule 10b5-1 plans.

Insiders have sold around $149 million worth of stock in the last 90 days. They collectively own 10.66% of the company.

Institutional holders own 82.68% of NET. Norges Bank added a new position worth around $718 million in Q4. Jennison Associates lifted its stake by 135.8% in Q1, bringing its holdings to around $906 million.

Cloudflare has set its FY2026 EPS guidance at $1.19–$1.20, with Q2 guidance of $0.27.

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