For years, Cloudflare (NET) was easy to explain.
It helped websites load faster, blocked cyberattacks, and kept internet traffic moving.
In the era of artificial intelligence, that description sounds outdated.
Cloudflare’s second-quarter revenue climbed 36% year over year to $696.1 million, while large customers paying more than $100,000 annually increased to 4,698, up roughly 27% from a year earlier. The company also raised its full-year revenue outlook to between $2.864 billion and $2.87 billion, helping send shares sharply higher after earnings.
The greater story is why.
The internet is starting to move away from humans browsing and toward machine-to-machine activity from autonomous AI bots, according to Cloudflare. Such agents crawl websites, question APIs, retrieve information, and increasingly make transactions without a human manually browsing through pages.
That alters the infrastructure the internet needs.
More automated traffic means more demand for routing, security, identification, payments, and developer tools tailored for software working with software.
For investors, that presents a broader AI thesis for Cloudflare than just “more companies are buying cloud services.”
The corporation may be turning into one of the toll collectors for ever-increasing machine-to-machine communication on the internet.
“As the web shifts to AI answer engines and agent-driven commerce, we are seeing a fundamental rewrite of the Internet for machine-to-machine traffic,” CEO Matthew Prince said. “Cloudflare sits at the center of this paradigm shift.”
Cloudflare is benefiting from an internet with fewer humans in the loop
Cloudflare’s own traffic analytics demonstrate how swiftly that transition is happening.
The company says that for the first time more than half of internet traffic is non-human, and 52% of crawler requests connected to AI training as of June 2026, up from 22% in spring 2025. Another 36% of the crawler traffic comes from mixed-use crawlers that combine search with agent activity and training.
That’s a big shift in how people are using online infrastructure.
The traditional online traffic usually followed a simple path: a person would open a browser, seek information, and click into a website.
AI agents are another story.
They might scrape many websites, retrieve data from APIs, compare costs, summarize outcomes, or even make purchases for customers. That might mean a whole lot more automated queries without the commensurate rise in good old human visits.
Cloudflare sits in the middle of those requests because its network already handles traffic for a significant portion of the web. The company says more than 20% of websites lie behind its network.
That gives a unique leg-up.
AI might produce more traffic and increase Cloudflare revenue and also provide tools to regulate which agents get access and how they act.
Related: Morgan Stanley sharply revamps Cloudflare stock price target
Already the company is moving beyond simple traffic control.
Cloudflare has introduced identification and wallet tools aimed at autonomous agents. The method allows companies to verify who approved an AI agent and gives those agents limited spending power for online purchases.
This takes Cloudflare further into the commercial layer of the agentic internet.
It’s not only about protecting websites from bots; it’s about helping differentiate real AI assistants from dangerous automated traffic.
That may become more crucial as agents go from reading information to actually purchasing things and services.
Cloudflare’s developer growth may be the most important earnings signal
The second-quarter profit beat was substantial.
One operating metric, however, may be more important over time.
Cloudflare added over 2 million developers in the quarter alone, compared with 1.5 million in all of the previous year, Reuters said. The Workers platform is the company’s fastest-growing division as expenditure on a use basis is accelerating, Morgan Stanley analysts said.
Developers are important because they decide where future AI applications are implemented.
Cloudflare Workers allows you to run applications directly across Cloudflare’s worldwide network, rather than depending exclusively on traditional centralized cloud infrastructure.
That architecture becomes more attractive when AI applications require low-latency access to consumers, APIs, and data.
The company’s enormous consumer numbers reflect the trend.
Cloudflare closed the quarter with 4,698 customers spending $100,000 or more a year, up around 27% year-over-year. Revenue from larger customers has become an increasingly essential part of the business.
More AI:
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At the same time, the security challenge is growing.
That opens up another possible development avenue for Cloudflare with bot management, application security and identity restrictions.
Thus, AI might create more traffic for Cloudflare to carry and new risks for Cloudflare to fight against.
Cloudflare investors are paying heavily for the agentic internet
It’s a massive opportunity.
The valuation is too high.
By Aug. 7, shares of Cloudflare had risen more than 44% in 2026, and the stock traded at more than 190 times anticipated earnings, versus 145 times for CrowdStrike, Reuters reported.
That means investors are already factoring in big future growth.
The most recent results help support some of that optimism.
Second-quarter revenue grew 36%, current remaining performance obligations increased 35%, and free cash flow rose to $56.4 million from $33.3 million a year earlier. Cloudflare also raised its full-year adjusted earnings-per-share forecast to $1.25 to $1.26 from $1.19 to $1.20.
But the company still posted a GAAP operating loss of $205.7 million, or nearly 30% of revenue.
That sets up a familiar growth-stock conundrum for investors.
Cloudflare might be at the heart of one of the biggest architectural revolutions on the internet.
It also has to grow fast enough to warrant one of the sector’s biggest multiples.
What Cloudflare investors should watch next
- Developer growth: The 2 million developers added in Q2 suggest Workers is becoming a meaningful AI platform.
- Large customers: Continued 20%-plus growth would support the enterprise expansion thesis.
- Agent traffic: More machine-to-machine activity could increase demand for routing, security and identity tools.
- Security monetization: AI agents create new attack surfaces that Cloudflare may be able to monetize.
- Margins: Revenue growth matters less if GAAP losses remain elevated.
- Valuation: At more than 190 times forward earnings, even strong execution may already be reflected in the stock.
Cloudflare’s quarter so far reflects more than a typical profit beat.
The internet is transforming.
For decades, websites were developed with a focus on users who clicked on links.
Now software agents increasingly search, retrieve, evaluate, and transact on behalf of those individuals.
Cloudflare is betting all those automated interactions will demand infrastructure underlying them.
If that occurs, the corporation is not only keeping the old internet alive.
Maybe it’s helping build the next one.
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