Cloudflare Q2: The Agentic AI Inflection is Beginning

Shots have been fired, with Cloudflare’s management team calling hyperscaler businesses commoditized and, overall, an “unattractive” business. Given I sit in on many earnings calls, I have to say, this was one of the more exciting ones this quarter.  For a company with about $3 billion in annual revenue to call into question the Big 3, whose cloud businesses generate a combined $400 billion, is bold. But perhaps we should hear it out.  Regarding this quarter, the results were “good,” but not spectacular like many of our hardware stocks. Instead, what caught my attention was the compelling argument that Cloudflare’s business model is better suited than the hyperscalers for the era of agentic AI. That’s why I want to get directly to the point.  Also, I think NET could be right.