Is Cloudflare, Inc. (NET) a Must-Own at $132? Here's Why the Cloud Security Leader Could Soar

Investors are buzzing about Cloudflare, Inc. (NYSE:NET) after its Q1 2025 earnings report delivered a 27% revenue surge and a $100+ million landmark contract. With shares trading near $132, the question is: Is this a buying opportunity or a bubble waiting to burst? Let’s dig into the numbers—and don’t ignore the risks.

The Bull Case: Growth on Steroids

Cloudflare’s first quarter was a masterclass in execution. Revenue hit $479.1 million, up 27% year-over-year, with both enterprise and mid-market customers firing on all cylinders. The star here is Channel Partners, which grew by 59.8% to $112.6 million—proof that Cloudflare’s ecosystem is expanding its reach. But the real fireworks came from its Workers platform, which landed the company’s largest deal ever: a multi-year contract worth over $100 million.

This isn’t just about size—it’s about strategy. Cloudflare is positioning itself as the go-to for SASE (Secure Access Service Edge) solutions, a sector projected to hit $12 billion by 2028. CEO Matthew Prince isn’t messing around: the company just signed its longest-term SASE contract, locking in recurring revenue for years.

Profitability: Progress, Not Perfection

While revenue is soaring, profits are still a work in progress. GAAP net loss widened slightly to $0.11 per share, but non-GAAP earnings stayed steady at $0.16, matching Q1 2024. The key takeaway? Cloudflare is reinvesting aggressively in its future. Free cash flow, however, is a bright spot: it jumped 49% to $52.9 million, fueled by operational efficiency.

The company’s customer base is exploding, too. Paying customers hit 250,819 (+27% YoY), with 3,527 enterprises spending over $100k annually. The net retention rate of 111% means existing clients are spending more over time—a gold standard for SaaS businesses.

The May 2025 Forecast: Volatility Ahead?

Let’s get tactical. The deep learning forecast for May shows Cloudflare’s stock could swing between $109.89 and $141.38, with the regular price hovering around $126–128 by month-end.

The May 28 peak of $128.52 aligns with earnings momentum, but the dip to $122.097 on May 16 reminds us that tech stocks are sensitive to macro fears. Bulls will argue that the $151.37 1-year target (a 32% gain from January 2025) is achievable if Cloudflare keeps landing enterprise deals.

The Bear Case: Risks in the Cloud

Don’t let the numbers blind you to the dangers. Geopolitical tensions could disrupt global IT spending, and AI-driven competitors (hello, AWS and Microsoft) are nipping at Cloudflare’s heels. The company’s non-GAAP gross margins dipped to 77.1% from 79.5% a year ago—a sign that pricing pressure or customer mix changes could crimp profits.

Plus, the Zacks Rank #3 (Hold) isn’t exactly a ringing endorsement. Analysts are cautious because Cloudflare’s valuation is already rich: at $132, it trades at ~10x forward revenue, a premium to peers like Palo Alto Networks (PANW) or CrowdStrike (CRWD).

Conclusion: Buy the Dip, but Stay Alert

Cloudflare isn’t just a security play—it’s a $12 billion SASE goldmine with a rocket ship trajectory. The Q1 results, massive contracts, and $1.9 billion cash hoard give it the fuel to outmuscle rivals.

At $132, the stock is a “hold” today but a buy below $120—especially if you can stomach the volatility. The May forecast’s $141.38 high isn’t a fantasy if Cloudflare delivers on its $2.09 billion full-year revenue target (+25% growth).

But here’s the kicker: the net retention rate of 111% means customers are doubling down. That’s the kind of loyalty that turns SaaS companies into legends.

Final Verdict: Cloudflare’s got the goods to grow, but don’t chase the stock above $135. Wait for a pullback—and then pounce. This isn’t just about the cloud. It’s about owning the future of cybersecurity.

Data Points to Remember:
- 2025 Revenue Guidance: $2.09B – $2.094B (25% growth).
- Non-GAAP EPS: $0.79–$0.80 (5% growth).
- Largest Enterprise Deal: >$100M (Workers platform).
- May 2025 High Forecast: $141.38 (vs. current $132).

Invest wisely—this one’s worth watching, but not chasing.