Cloudflare (NET) Surges 2.5% Amid AI-Driven Partnership Hype—Is This the Catalyst for a New Bull Run?

Summary
• Cloudflare (NET) surges 2.5% to $222.99, nearing its 52-week high of $230.10
• Partnership with Oracle and Visa sparks agentic commerce innovation
• Options chain shows heightened volatility, with 21 contracts trading above 50% implied volatility
• Institutional selling and analyst downgrades cast shadows on long-term optimism

Cloudflare’s intraday rally on October 15, 2025, reflects a mix of strategic alliances and market skepticism. The stock’s 2.5% gain—driven by a partnership with Oracle and Visa to secure AI-driven commerce—contrasts with recent analyst downgrades and institutional selling. With the Nasdaq down 0.76% and the S&P 500 flat, Cloudflare’s outperformance highlights its position at the intersection of AI infrastructure and cybersecurity.
Agentic Commerce Alliances Ignite Short-Term Optimism
Cloudflare’s 2.5% intraday surge stems from its strategic partnerships with Oracle and Visa to develop a security layer for agentic commerce, an emerging e-commerce model where AI agents execute purchases. The collaboration leverages Cloudflare’s Web Bot Auth protocol to verify AI agents’ identity in real time, embedding the technology into Visa’s Intelligent Commerce platform and Mastercard’s frameworks. This move positions Cloudflare as a foundational player in securing AI-driven transactions, a market expected to expand rapidly. However, the stock’s 1.53% monthly decline and recent analyst downgrades—such as BofA’s ‘Underperform’ rating—suggest lingering doubts about execution risks and valuation sustainability.

Internet - Software Sector Volatility: Microsoft (MSFT) Trails Cloudflare’s Gains
The Internet - Software sector, led by Microsoft (MSFT), saw a modest 0.27% intraday gain, trailing Cloudflare’s 2.5% move. While Cloudflare’s AI-focused initiatives draw attention, Microsoft’s broader cloud and AI investments remain a sector benchmark. Cloudflare’s 260.44 forward P/E ratio, compared to the sector’s 28.74 average, underscores its premium valuation. The sector’s Zacks Industry Rank of 57 (top 24% of 250+ industries) reflects mixed sentiment, with Cloudflare’s Zacks Rank of 3 (Hold) signaling caution despite its recent partnership-driven rally.

Options Playbook: Capitalizing on Cloudflare’s AI-Driven Volatility
• 200-day MA: $163.26 (well below current price)
• RSI: 50.0 (neutral, suggesting potential for both sides)
• MACD: 1.55 (bullish divergence from signal line 2.31)
• Bollinger Bands: Upper at $227.74, Middle at $219.59, Lower at $211.44

Cloudflare’s technicals present a mixed picture: a long-term bullish trend (30D MA at $219.09) clashes with a short-term bearish pattern. The stock’s proximity to its 52-week high and elevated options volatility (60%+ IV in key contracts) suggest a high-risk, high-reward setup. Two options stand out for aggressive positioning:

• NET20251024C215 (Call, $215 strike, 2025-10-24 expiry):
- IV: 60.32% (high)
- Delta: 0.68 (moderate sensitivity)
- Theta: -0.958 (rapid time decay)
- Gamma: 0.0159 (moderate sensitivity to price swings)
- Turnover: $196,390 (liquid)
- LVR: 15.78% (moderate leverage)
- Why it works: This call option balances leverage and liquidity, ideal for a bullish breakout above $220. A 5% upside to $234.13 would yield a payoff of $19.13 per contract, aligning with the stock’s 52-week high proximity.

• NET20251024P220 (Put, $220 strike, 2025-10-24 expiry):
- IV: 62.44% (high)
- Delta: -0.40 (moderate downside sensitivity)
- Theta: -0.055 (slow decay)
- Gamma: 0.0167 (moderate sensitivity)
- Turnover: $33,056 (liquid)
- LVR: 31.43% (strong leverage)
- Why it works: This put offers downside protection if the AI hype falters. A 5% downside to $212.33 would yield a $7.67 payoff, hedging against analyst skepticism and institutional selling.

Action Plan: Aggressive bulls should target the NET20251024C215 call for a breakout above $220, while cautious investors may pair it with the NET20251024P220 put for a collar strategy. Watch for a close above $225 to confirm bullish momentum.

Backtest Cloudflare Stock Performance
Here is the back-test summary for the “buy NET after a ≥ 2 % intraday surge” idea, using daily data from 1 Jan 2022 through today.(jgy-json-canvas)Key metrics (2022-01-01 → 2025-10-15):• Total return: +93.1 % • Annualised return: 41.6 % • Sharpe ratio: 0.60 • Max drawdown: -70.9 %Interpretation & caveats1. The test simply enters at the day’s close when NET finishes ≥ 2 % higher; positions are exited under the engine’s default rule (next-day close). 2. Only a small set of trades met the trigger over the sample, so results are volatile—the 70 % drawdown highlights considerable risk despite the attractive headline return. 3. No risk controls (stop-loss / take-profit) were added. Refining exit logic or adding stops could materially change the profile.Feel free to explore alternative thresholds or holding rules if you’d like deeper insight.

AI-Driven Volatility: Position for Breakout or Breakdown by October 24
Cloudflare’s rally hinges on its ability to capitalize on agentic commerce adoption and maintain its AI infrastructure edge. The stock’s 2.5% gain today, while positive, must hold above $220 to validate the partnership-driven narrative. With Microsoft (MSFT) up 0.27% and the sector mixed, Cloudflare’s premium valuation remains a double-edged sword. Investors should monitor the October 24 options expiry for liquidity-driven price swings and earnings guidance on October 30. Act now: Buy the NET20251024C215 call for a bullish breakout or the NET20251024P220 put for downside protection. The AI-driven internet is here—will Cloudflare lead or lag?