AI applications "Bull Market Narrative" further enhanced! Cloudflare (NET.US) sales increased by 31%, and stock prices soared to an all-time high.

Benefiting from an unprecedented AI boom, as well as experiencing restructuring and adding more large enterprise clients, Cloudflare Inc.'s latest sales figures are stronger than Wall Street's continuously revised growth expectations. The company's management also has strong outlooks for the fourth quarter and the year, propelling its stock price to rise nearly 14% by Friday's close, reaching a record high. The cloud computing service company, focused on "Connectivity Cloud," is expected to have sales of around $5.89 billion for the fourth quarter, higher than Wall Street analysts' average estimate of $5.809 billion, indicating a 28% sales growth expectation. Prior to the announcement of Cloudflare's latest performance and outlook, Wall Street had been continuously revising the core performance indicators and outlook for the cloud computing company driven by the AI boom. In terms of third-quarter performance, Cloudflare's sales for the previous quarter totaled around $562 million, achieving a significant 31% year-over-year growth, exceeding the average analyst expectations on Wall Street. Cloudflare has raised its adjusted earnings per share expectation for this fiscal year from the previous range of $0.85 to $0.86 to a midpoint of $0.91, higher than the average Wall Street estimate. The sales growth outlook for this fiscal year is also around 28%, higher than Wall Street's expectation of around 20% growth. During Friday's trading hours, Cloudflare surged over 14% to $254.30, hitting a record high since May and ultimately closing at a new high of $253.30, up by 13.84%. Based in San Francisco, Cloudflare's stock price has been on a strong upward trend recently, rising over 120% year-to-date. Wall Street analysts attribute its strong momentum to Cloudflare's grand goal of building its widely distributed network into a large enough cloud, enabling customers to train/tune AI large models moderately and run large AI inference workloads on top of it. Despite Cloudflare's smaller scale compared to competitors like Akamai Technologies Inc., Palo Alto Networks Inc., and Fortinet Inc., Wall Street analysts' reports suggest that its ease of use has attracted a large number of medium and small-sized businesses in the United States. The addition of new large clients this year, as well as significant support for generative AI from their Connectivity Cloud, has brought strong performance growth data for the company in recent quarters. CEO Matthew Prince expressed his confidence in Cloudflare's sales not being significantly impacted by the bursting of the AI bubble; he expects 80% of AI-related tech companies to some extent use Cloudflare's cloud computing tools, but states that this still represents a relatively small portion of the company's overall sales. What is Cloudflare and why is it benefiting from the AI boom? Cloudflare focuses on a "Connectivity Cloud" positioning: unifying network acceleration (native CDN/Anycast network), security (WAF, DDoS, Zero Trust/SASE), and developer platform (Workers serverless, KV/D1/Queues, R2 object storage, etc.) onto a global edge network architecture, providing enterprises with "connectivity + protection + acceleration," which has been their clear narrative and product packaging logic for the past two years. Different from cloud computing giants like Microsoft Corporation/Alphabet Inc. Class C that lean towards central cloud/super-large scale training and inference clusters, tying their own or ecosystem models and data platforms, Cloudflare leans more towards edge + network + security integration, emphasizing "locally landing inference, RAG, data access, and security control," connecting traffic, data, inference, and security in a line; it can complement central cloud architecture's "last mile" and coexist with multi-cloud, resembling a network and edge operating system in the AI inference era. Running AI inference tasks (text/image/speech, etc.) on Cloudflare's global edge network is cost-effective, and they claim to bring NVIDIA Corporation AI GPU computing clusters and AI large models to POP nodes within milliseconds of users, emphasizing low latency, elasticity, and on-demand billing, suitable for generative AI's online inference/intelligent body scenarios. Therefore, Cloudflare's positioning is not to compete with the large cloud giants in "AI training/inference farms," but to create a "native edge integrated pedestal" for network, security, storage, vectors, and AI inference workloads. When AI applications explode and the volume of calls and data flow accelerates across clouds, this combination of "Connectivity Cloud + Edge AI" naturally benefits and complements the super clouds. Cloudflare's strong performance data and outlook indicate a deep strengthening of the "bull market narrative" for AI application software. As global tech stock investing now covers AI computing infrastructure and AI application software, this provides significant support for AI application companies such as Applovin, Trade Desk, Duolingo, and Palantir, likely leading to explosive growth of killer-level generative AI applications covering various industries on the B-side or C-side, and greatly boosting human society's productivity, explaining why global funds are flooding into software stocks recently.