Cloudflare will benefit from rising demand for cloud computing services as artificial intelligence adoption booms, priming it for solid gains ahead, according to Piper Sandler. The investment firm upgraded cloud name to overweight from neutral. Its $222 price target imply 24.3% upside from Tuesday’s close. Piper also said the stock trades at a discount, having lost more than 9% in 2026. “We have long-viewed Cloudflare as one of our favorite long-term stories given where infrastructure is heading,” analyst James Fish said Tuesday in a note to clients. “A great entry point has been hard to come by given this, but we see the recent pullback as a window to get involved.” Cloudflare is poised to bring in business through pay-as-you-go computing services, including network-as-a-service (NaaS), secure, access service edge (SASE) and infrastructure as a service (IaaS), according to the analyst. Those cloud computing services allow customers to access and store information in a at a lower cost. But shares have been under pressure this year amid a broader slump in software stocks. That decline has been fueled by concerns that AI could disrupt the industry — a risk that is particularly top of mind for investors following the limited release of Anthropic’s Claude Mythos . NET YTD mountain Shares are down 9% in 2026 However, cloud computing services are likely to remain popular, particularly in the age of generative AI. Cloud computing sales are expected to hit $2 trillion by 2030, with generative AI accounting for up to roughly 15% of that spending, according to Goldman Sachs Research. Cloudflare, which already has a working relationship with OpenAI, is poised to be a preferred provider of AI firms, Piper Sandler said. “Cloudflare and its edge-peers should be AI-Infrastructure winners, and specifically for Cloudflare via: 1) Workers / IaaS solutions hosting AI applications; 2) increased use of caching as part of AI-infrastructure, along with increased website traffic; 3) network & application security. Cloudflare has a unique relationship with OpenAI, and is a core provider for Anthropic’s back-end,” Fish wrote.
