Shares of Cloudflare and Fortinet were surging on Friday after both companies delivered better-than-expected fourth-quarter earnings, boosting investor confidence in the cybersecurity sector.
Cloudflare stock was up by 11.46% at market open on Friday, while Fortinet was up by almost 4%.
The rally came as both companies exceeded Wall Street estimates and provided positive guidance.
However, their CEOs’ comments on key market themes—including artificial intelligence spending and trade tensions—drew just as much attention as the earnings themselves.
Analysts though, expressed a broadly bullish sentiment on both stocks.
Analysts increase TP for Cloudflare (NET), CEO says DeepSeek bodes well for co.
Following the strong earnings report, Bernstein SocGen Group raised Cloudflare’s price target from $80 to $100, maintaining a market perform rating.
Needham analysts were more bullish, increasing their price target from $160 to $185 while keeping a buy rating.
Cloudflare’s stock has already posted a nearly 70% return over the past year and is trading close to its 52-week high of $144.30.
Cloudflare CEO Matthew Prince also addressed the impact of Chinese AI startup DeepSeek during the company’s earnings call.
DeepSeek’s rapid rise has disrupted the AI landscape, raising fears that major cloud providers may struggle to justify their enormous AI investments.
Prince pushed back against the idea that AI innovation must come with massive costs, stating that Cloudflare’s business model aligns well with this evolving landscape.
“This idea that the only way to win in AI was to spend hundreds of billions or even trillions of dollars—I think DeepSeek shook that foundation, and I think that plays very much to Cloudflare’s strength,” he said.
He also emphasized Cloudflare’s ability to maximize efficiency in AI processing.
“We are extremely good at wringing out as much efficiency as possible, and we’re seeing the same opportunities with inference that DeepSeek saw with training,” Prince added.
Cloudflare uses a globally distributed network of GPUs, allowing customers to build AI applications at a lower cost.
Fortinet (FTNT) share price target increased, but CFO flags tariff impacts
While Cloudflare focused on AI, Fortinet CFO Keith Jensen addressed trade concerns, warning that tariffs could create headwinds for the cybersecurity sector.
He pointed to increased levies on imported technology components as a reason for Fortinet’s cautious guidance for the current quarter.
Despite this, Fortinet delivered a strong Q4 performance, reporting adjusted net income of 74 cents per share on revenue of $1.66 billion.
This exceeded analysts’ expectations of 61 cents per share on revenue of $1.59 billion.
“Fortinet reported a solid quarter across the board, helped by an improving firewall market and an early start to large customers’ refresh activity,” said Keith Bachman, an analyst at BMO Capital Markets.
He noted that Fortinet’s operating margins exceeded consensus estimates by over 500 basis points.
For 2025, Fortinet projected revenue between $6.65 billion and $6.85 billion, in line with estimates.
The company expects billings to reach $7.3 billion, signaling steady demand despite macroeconomic uncertainties.
Cantor Fitzgerald raised its price target for Fortinet from $95 to $110, maintaining a neutral rating.
The firm’s estimate suggests a potential 5% upside from Fortinet’s last closing price.
Customer growth and future outlook
Cloudflare’s earnings report highlighted robust customer growth, with record net additions in both the over-$100,000 and under-$100,000 categories.
The company’s revenue retention rate also improved by 1%, though analysts caution it may temporarily dip next quarter due to a leap-year comparison before rebounding.
Fortinet, meanwhile, benefited from early IT spending by large enterprises, particularly in firewall security.
While management expects a 10% increase in billings this year, analysts believe the company’s second-half refresh cycle could push growth even higher.
With AI reshaping the technology landscape and trade uncertainties lingering, both Cloudflare and Fortinet remain well-positioned for long-term growth.
As investors digest these earnings, the focus will be on how these companies navigate evolving market dynamics in the months ahead.
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