Most of this attached podcast episode had to do with VC investing in private AI companies, and is probably not of much interest to most here. However, there was a point starting at about the 50 minute mark where the guest talked about Cloudflare. He did not give a ton of details, but he said that his firm “sees Cloudflare in all the infrastructure behind a lot of our companies”.
I believe there were some comments around the time of the last ER indicating that the recent AI explosion could benefit NET. This podcast is just one random anecdote, but I thought it was worth sharing.
Long NET - 2.6% - 4th largest investment
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NET is quietly up over 200% from the July 2023 lows.
I asked Grok why there was such a big jump today and here was the answer:
The significant increase in Cloudflare’s (NET) stock price today can be attributed to several factors based on recent financial data and market sentiment:
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Positive Analyst Upgrades: Analysts from reputable firms like Truist and JMP Securities have upgraded their price targets for Cloudflare. Truist raised its target to $140 from $120, citing continued growth in AI as a tailwind, particularly with Cloudflare’s Workers AI and inference capabilities. JMP Securities also raised their price target to $135 from $120, maintaining a Market Outperform rating, highlighting Cloudflare’s role as the “connective tissue” for cloud environments and its potential in the expanding market for AI applications.
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Market Reaction to AI Trends: The market appears to be reacting positively to Cloudflare’s positioning in the AI sector. Posts on X suggest that Cloudflare is seen as a key player due to lower costs associated with AI models like DeepSeek, which could increase demand for Cloudflare’s services as AI startups and applications grow. This is further emphasized by mentions of Cloudflare being the preferred choice for AI startups for inference, suggesting a potential exponential increase in demand due to the Jevons Paradox.
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General Market Dynamics: The broader context includes considerations of how AI cost efficiencies might shift market dynamics away from chip-focused companies to those providing infrastructure, like Cloudflare. This shift could explain part of the stock’s performance as investors reassess where value is being created in the AI ecosystem.
The capitulation event after the 2023 ER where the CEO threw his sales team under the bus was a prime buying opportunity.
Long NET 3.6%
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