Why Cloudflare (NET) Shares Are Falling Today

Recent Developments with Cloudflare

Cloudflare (NYSE:NET), a leader in cloud security and performance, experienced a 9.9% decline in its share price during the afternoon trading session. This drop followed a period of strong gains, as investors decided to lock in profits after a sustained rally that was sparked by the company's advancements in artificial intelligence.

The recent surge in Cloudflare’s stock was largely driven by the rapid adoption of autonomous AI agents built on its platform. The widespread attention these developments received served as a compelling demonstration of Cloudflare’s pivotal role in the expanding AI sector. As more developers leverage Cloudflare’s global infrastructure to support sophisticated, autonomous systems, the company is increasingly recognized not just for its security solutions, but as a crucial edge computing provider for the new era of agentic AI—systems that demand fast, distributed computing resources worldwide.

Market reactions to news can sometimes be exaggerated, and significant price drops may offer attractive entry points for investors seeking quality stocks. Considering this, is now a good opportunity to invest in Cloudflare?

Market Sentiment and Stock Performance

Cloudflare’s stock is known for its volatility, having experienced 21 separate movements of more than 5% over the past year. In this context, the latest decline suggests that while the news is significant, it does not fundamentally alter the market’s overall view of the company.

Just one day prior, Cloudflare shares surged by 13.9% after open-source AI assistants built on its infrastructure gained widespread attention, further validating its importance in the agentic AI landscape.

The popularity of these AI assistants has reinforced Cloudflare’s reputation as a foundational platform for next-generation AI applications. Investors took notice when RBC Capital reaffirmed its Outperform rating and set a $265 price target, attributing the stock’s momentum to the growing demand for AI-driven workloads rather than traditional web traffic. As AI agents increasingly require secure, localized deployment—facilitated by tools like Cloudflare Tunnels—the company is evolving from a security provider into an essential utility for autonomous digital operations.

Since the start of the year, Cloudflare’s stock has dropped 5.7%. Currently trading at $184.85 per share, it remains 27% below its 52-week high of $253.30 reached in October 2025. For perspective, an investment of $1,000 in Cloudflare five years ago would now be valued at $2,346.

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