Key Takeaways
- Shares of Cloudflare surged more than 10% on September 9 following Meta’s introduction of its Muse AI agent
- The Muse platform is projected to significantly boost agentic web traffic, creating tailwinds for Cloudflare’s infrastructure services
- On September 3, Cloudflare unveiled a new AI-driven security offering powered by OpenAI’s GPT-5.6 Cyber model
- Second-quarter revenue reached $696.1 million, representing 35.9% growth versus the prior year, while adjusted earnings per share hit $0.29
- The company increased its full-year outlook for both revenue and earnings following the impressive quarterly performance
Shares of Cloudflare (NET) rocketed more than 10% higher on September 9, finishing the session at $314.18. The rally was fueled by investor optimism that the company stands to gain significantly from Meta Platforms’ recently introduced Muse personalized AI agent.
Meta’s CEO Mark Zuckerberg revealed Muse on September 8. This AI agent is built to safely handle routine consumer tasks, operating within a sandboxed Linux environment equipped with dedicated browser access, processing power, memory allocation, and storage capacity.
With Meta’s ecosystem reaching 3.6 billion daily active users globally, even modest adoption rates for Muse could trigger substantial increases in web traffic volume. Cloudflare’s infrastructure is strategically positioned to capture this demand.
The company provides distributed network infrastructure that handles routing, security, and performance optimization for web traffic at the network edge. An expansion in agentic traffic translates directly into heightened demand for Cloudflare’s core offerings.
This isn’t the first collaboration between these tech giants. In 2025, Meta integrated its open-source Llama model into Cloudflare’s Workers AI platform to enable localized AI inference capabilities.
During the previous quarter’s earnings call, Cloudflare CEO Matthew Prince revealed a milestone: more than half of all traffic flowing through the company’s network now originates from non-human, agentic sources. This percentage appears poised for further expansion.
Additionally, Cloudflare recently introduced Wallet, a solution designed to facilitate secure commercial transactions between AI agents and business merchants. Muse is anticipated to leverage this functionality.
OpenAI Collaboration Provides Additional Growth Driver
The positive momentum from Muse wasn’t Cloudflare‘s only catalyst this week. On September 3, the company unveiled “Vulnerability Discovery and Remediation,” a new capability within its Managed Defense offering.
This solution leverages OpenAI’s GPT-5.6 Cyber model to autonomously identify, verify, and recommend solutions for software security vulnerabilities. It merges codebase examination with live traffic intelligence from Cloudflare’s worldwide network infrastructure and can implement customized firewall configurations while generating code patches for development teams.
Solid Financial Performance Reinforces Bull Case
Cloudflare’s second-quarter financial results provided investors with further reasons for optimism. Revenue climbed to $696.1 million, marking 35.9% year-over-year expansion. Adjusted earnings per share reached $0.29, surpassing analyst expectations. Billings increased 34.8% to $753.5 million.
While GAAP operating margins faced headwinds from a one-time impairment charge, the underlying business trends remained robust.
Following these results, management elevated its full-year projections for both revenue and adjusted earnings per share.
The stock has climbed 59.1% since the start of the year and was approaching its 52-week peak of $332.22 before the latest trading session.
Trading at approximately 40 times sales and 114 times forward earnings, the valuation remains elevated. However, Cloudflare has consistently commanded premium multiples throughout its tenure as a publicly traded entity.
While the company has experienced 35 daily moves exceeding 5% during the past year, a single-day gain of 10% stands out as exceptional even against its volatile trading history.
With shares priced at $314.18, the stock is hovering near its 52-week high of $332.22.
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