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Can Rising Adoption of Agentic AI Accelerate NET's Revenue Growth?
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Key Takeaways
Cloudflare saw more than 50% of network traffic come from nonhuman sources in the second quarter.
Workers added nearly 2 million developers, reaching more than 7.4 million as AI agent use grows.
Cloudflare launched new tools to monetize transactions among AI agents, businesses and content providers.
Cloudflare (NET - Free Report) is seeing strong demand for its platform as businesses increasingly use artificial intelligence (AI) agents. In the second quarter of 2026, management said more than 50% of the traffic flowing across Cloudflare’s network was nonhuman in the second quarter, reflecting the rapid growth of AI agents and other machine-to-machine traffic. The company expects this trend to continue as businesses move from traditional web browsing toward AI-driven search, applications and agentic commerce.
Cloudflare’s Workers developer platform is one of the key products benefiting from this shift. The company ended the quarter with more than 7.4 million developers on its platform, adding nearly two million in the quarter alone. Management said Workers remains one of the fastest-growing parts of its business and is becoming a major driver of customer adoption and revenue growth as developers use it to build and deploy AI agents.
The growing use of AI agents is also creating new monetization opportunities for Cloudflare. During the second quarter, the company introduced Monetization Gateway, Wallets and cloudflare.pay to support transactions between AI agents, businesses and content providers. Management expects these tools to help Cloudflare participate in the evolving business model of the Internet as AI agents generate increasing volumes of traffic and transactions.
The AI opportunity comes as Cloudflare’s core business continues to grow at a strong pace. Second-quarter revenues increased 36% year over year, while dollar-based net retention reached 120%. Management said the company’s total addressable market has expanded to more than $300 billion from $30 billion at the time of its IPO as it has entered into areas such as SASE, Zero Trust, developer services and newer AI-related workloads. The growing use of AI agents and rapid adoption of Workers are helping Cloudflare address these opportunities, which should help the company increase its share in this expanding market and support revenue growth in the coming years.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Zscaler (ZS - Free Report) and Palo Alto Networks (PANW - Free Report) are also seeing higher demand for solutions that help enterprises secure AI applications, models and autonomous agents.
Zscaler is expanding its platform to secure AI agents and enterprise AI use. Its Zero Trust Exchange for agents and Endpoint AI Security are designed to enforce AI policies and protect agent activity. The company also plans to launch Agentic SecOps, which uses AI agents to detect, investigate and respond to threats at machine speed. Zscaler ended fiscal 2026 with 950-plus Zero Trust Everywhere customers compared with more than 350 at the end of fiscal 2025.
Palo Alto Networks is taking a similar approach with Prisma AIRS, which is focused on securing AI applications and agents. Prisma AIRS crossed $100 million in ARR within four quarters of general availability and had more than 800 customers by the end of fiscal 2026. Further, agentic traffic on PANW’s SASE platform increased ninefold over the past nine months, while SASE bookings grew 40% in fiscal 2026.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 69.4% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 3%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 34.21, significantly higher than the industry’s average of 4.20. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
View the Zacks #1 Rank List
Image: Bigstock
Can Rising Adoption of Agentic AI Accelerate NET's Revenue Growth?
Key Takeaways
Cloudflare (NET - Free Report) is seeing strong demand for its platform as businesses increasingly use artificial intelligence (AI) agents. In the second quarter of 2026, management said more than 50% of the traffic flowing across Cloudflare’s network was nonhuman in the second quarter, reflecting the rapid growth of AI agents and other machine-to-machine traffic. The company expects this trend to continue as businesses move from traditional web browsing toward AI-driven search, applications and agentic commerce.
Cloudflare’s Workers developer platform is one of the key products benefiting from this shift. The company ended the quarter with more than 7.4 million developers on its platform, adding nearly two million in the quarter alone. Management said Workers remains one of the fastest-growing parts of its business and is becoming a major driver of customer adoption and revenue growth as developers use it to build and deploy AI agents.
The growing use of AI agents is also creating new monetization opportunities for Cloudflare. During the second quarter, the company introduced Monetization Gateway, Wallets and cloudflare.pay to support transactions between AI agents, businesses and content providers. Management expects these tools to help Cloudflare participate in the evolving business model of the Internet as AI agents generate increasing volumes of traffic and transactions.
The AI opportunity comes as Cloudflare’s core business continues to grow at a strong pace. Second-quarter revenues increased 36% year over year, while dollar-based net retention reached 120%. Management said the company’s total addressable market has expanded to more than $300 billion from $30 billion at the time of its IPO as it has entered into areas such as SASE, Zero Trust, developer services and newer AI-related workloads. The growing use of AI agents and rapid adoption of Workers are helping Cloudflare address these opportunities, which should help the company increase its share in this expanding market and support revenue growth in the coming years.
The Zacks Consensus Estimate for Cloudflare’s 2026 and 2027 revenues indicates year-over-year growth of 32.5% and 28.6%, respectively.
Cloudflare Faces Tough Competition
Zscaler (ZS - Free Report) and Palo Alto Networks (PANW - Free Report) are also seeing higher demand for solutions that help enterprises secure AI applications, models and autonomous agents.
Zscaler is expanding its platform to secure AI agents and enterprise AI use. Its Zero Trust Exchange for agents and Endpoint AI Security are designed to enforce AI policies and protect agent activity. The company also plans to launch Agentic SecOps, which uses AI agents to detect, investigate and respond to threats at machine speed. Zscaler ended fiscal 2026 with 950-plus Zero Trust Everywhere customers compared with more than 350 at the end of fiscal 2025.
Palo Alto Networks is taking a similar approach with Prisma AIRS, which is focused on securing AI applications and agents. Prisma AIRS crossed $100 million in ARR within four quarters of general availability and had more than 800 customers by the end of fiscal 2026. Further, agentic traffic on PANW’s SASE platform increased ninefold over the past nine months, while SASE bookings grew 40% in fiscal 2026.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 69.4% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 3%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 34.21, significantly higher than the industry’s average of 4.20. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
Image Source: Zacks Investment Research
Cloudflare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.