# Ben’s Portfolio update end of February 2026 **URL:** \ **Category:** Saul’s Investing Discussions\ **Created:** [February 27, 2026, 9:54pm UTC](https://discussion.fool.com/t/ben-s-portfolio-update-end-of-february-2026/123566 "2026-02-27T21:54:12Z")\ **Posts on this page:** 1\ **Showing post:** 3
**Author:** ![SlowAndFast](https://sea2.discourse-cdn.com/motleyfoolfree/user_avatar/discussion.fool.com/slowandfast/32/4316_2.png) [@SlowAndFast](https://discussion.fool.com/u/SlowAndFast)\ **Post date:** [February 28, 2026, 5:53pm UTC](https://discussion.fool.com/t/ben-s-portfolio-update-end-of-february-2026/123566/3 "2026-02-28T17:53:31Z")
Thanks for the question, @This2ShallPass! This is the quote from Cloudflare’s last earnings call (emphasis mine): “_A leading AI company expanded their relationship with Cloudflare, signing a two-year $85 million pool of funds contract for our full platform, selecting Cloudflare as their single long-term infrastructure provider with a 100% traffic allocation._ _ **Following a rigorous RFP, they selected Cloudflare over major hyperscalers not just for our unified stack and rapid innovation, but also for our strategic neutrality** _ _. This win underscores a growing trend:_ _ **the most sophisticated AI companies are choosing Cloudflare** _ _as their mission-critical independent platform to connect, protect, and build the future of the AI-driven Internet._” They didn’t name any customer, so I don’t know whom specifically they were talking about. In my opinion, Cloudflare’s biggest advantage over the hyperscalers (AWS, Azure, GCP) is its world-wide distributed, edge network, which allows it to process compute, security, and data tasks closer to end-users (within 50ms of 95% of the world’s population) far more efficiently and at a lower cost than centralized data centers. And this has become (and continues to become) an even bigger advantage for Cloudflare as [44% of organizations now allocate 76–100% of their AI budget to inference](https://www.digitalocean.com/resources/articles/ai-inference-vs-training). Cloudflare’s edge network is ideal for AI inference, especially for applications requiring low latency and/or global, scalable distribution. Regarding the FCF vs CapEx chart I posted at the beginning of my monthly recap: Free cash flow (FCF) is the actual cash a company has left over after paying its operating expenses and purchasing necessary equipment or assets (capital expenditures or CapEx). It represents the money available to pay dividends, reduce debt, or reinvest in growth without needing external financing. **It is the “real” money left in the bank**. This brings me back to Cloudflare’s world-wide distributed edge network: The GPUs that sit in all these servers all over the world are paid for by capital expenditures (“Purchases of property and equipment” in their earnings releases). Of course an investor should wonder whether those capital expenditures actually pay off by eventually creating more free cash flow than it costs to buy more GPUs (which is, by the way, why I am skeptical about all those Neo-clouds, because I just don’t know if their enormous Capex will ever pay off). In the case of Cloudflare there are two points that give me a lot of confidence: First, they only ever spend 12-15% of revenue for CapEx, and without external financing, so they are very disciplined. Second, they already went through a successful cycle of converting CapEx to FCF down the road, originally discussed [at the end of this post](https://discussion.fool.com/t/cloudflare-s-fascinating-q1-2024-earnings/104632/20): Once the hardware was installed it just needed to be sustained at a fixed cost level, while free cash flow started sky-rocketing. Back then in May 2024, I hypothesized that they will go through a similar cycle with AI: First upgrade their edge-network with GPUs that can be used for AI inferencing and then start capitalizing on it just as they did starting in 2022. And as you can see on the plot I posted above it looks like the same inflection is starting to happen in the last two quarters, just as it did in 2022. **I can’t emphasize enough how important it is to understand this!** Especially for people who have been calling out Cloudflare as trading at an insane price to earnings or price to free cash flow ratio; Once this inflection happens and they start ramping up free cash flow generation, without equally having to ramp CapEx, Cloudflare becomes a money printing machine and all those valuation concerns evaporate. I view Cloudflare a little bit like Amazon early on, where it seemed they would never make a significant profit, because they kept re-investing their revenue back into the company to grow it - until they became a money-printing behemoth. Anyways, this is my investment thesis for Cloudflare in a nutshell. Ben --- _[View the full topic](https://discussion.fool.com/t/ben-s-portfolio-update-end-of-february-2026/123566)._