Cloudflare is the IBD Stock of the Day as the software maker breaks out of a cup-with-handle base powered by strong volume. Cloudflare stock has advanced more than 24% this year amid investor buzz over artificial intelligence and cryptocurrency.
On the stock market today, Cloudflare stock surged 8.1% to close at 104.24.
Started in 2009, Cloudflare speeds up and provides security for web applications routed through its intelligent global network.
Cloudflare stock holds an entry point of 99.17.
In addition, Cloudflare recently hired a former top ServiceNow executive, Chirantan "CJ" Desai, as president of product and engineering.
Also, Cloudflare reported third quarter earnings of 20 cents, up 25% from a year earlier. Revenue climbed 28% to $430.1 million, the San Francisco-based company said.
Cloudflare Stock: AI, Crypto Developers
On Cloudflare's Q3 conference call with analysts, Chief Executive Matthew Prince said its cloud platform appeals to a wide range of software developers building artificial intelligence and other applications.
"If you look across the AI ecosystem, if you look across the sort of blockchain and cryptocurrency ecosystem, if you look across anywhere where someone is able to start with a blank slate, we're seeing adoption rate in the top startups," he said.
Cryptocurrency prices have jumped since Donald Trump triumphed in the 2024 Presidential election. Bitcoin rose again on Thursday, extending its postelection rally. Bitcoin notched a record high above $98,000.
Generative artificial intelligence has been a hot topic for investors since the emergence of ChatGPT maker OpenAI in late 2022. Further, Cloudflare has ties to OpenAI. Cloudflare provides secure links to cloud services when consumers sign up to use ChatGPT, a conversational chatbot.
Nvidia, Microsoft Partnerships
Also, Cloudflare has increased investments in AI infrastructure amid an alliance with chipmaker Nvidia.
Cloudflare has deployed Nvidia AI chips in its global network. The AI networking cards are plugged into computer server PCI slots, lowering capital spending needs.
Meanwhile, Nvidia stock fell on Thursday following its third quarter earnings report.
In 2023, Cloudflare announced its "Workers AI" platform and partnerships with Microsoft, privately held Databricks and Hugging Face.
In a recent report, RBC Capital Markets analyst Matthew Hedberg said Cloudflare "leverages a global network of PoPs (points of presence) and a serverless architecture."
"Management believes gen AI will be a significant long-term trend and believes the company is ready for the opportunity through its vast network of PoPs that are (Nvidia) GPU-enabled to run edge-based inferencing requests for models," Hedberg added.
"The company also believes they are well positioned for next-gen gen AI companies to build their applications on the Workers platform."
In a June report, Morgan Stanley speculated that there could be upside for Cloudflare stock from Apple's new artificial intelligence services on iPhones. Apple has launched Private Cloud Compute (PCC), a cloud computing based system, for private AI processing.
"We have reasons to believe that Cloudflare is the main provider of Apple PCC," said Morgan Stanley analyst Erik Woodring.
Cloudflare Stock Technical Ratings
Meanwhile, Cloudflare stock holds an IBD Composite Rating of 97, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Cloudflare stock has a B+ Accumulation/Distribution Rating. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on a scale of A+ to E, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
