{"id":418020,"date":"2026-05-08T13:35:10","date_gmt":"2026-05-08T13:35:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/418020\/"},"modified":"2026-05-08T13:35:10","modified_gmt":"2026-05-08T13:35:10","slug":"cloudflares-slowing-growth-disappoints-investors-betting-on-ai-boost","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/418020\/","title":{"rendered":"Cloudflare&#8217;s slowing growth disappoints investors betting on AI boost"},"content":{"rendered":"\n<p class=\"yf-1fy9kyt\">May 8 (Reuters) &#8211; Cloudflare shares tumbled more than 15% in premarket trading on Friday, after its quarterly revenue forecast disappointed investors who \u200chad bet the stock would be a major beneficiary in the \u200crace to adopt <a href=\"https:\/\/tech.yahoo.com\/ai\/\" data-ylk=\"slk:artificial intelligence;elm:context_link;itc:0;sec:content-canvas\" data-yga=\"{&quot;yLinkElement&quot;:&quot;context_link&quot;,&quot;yModuleName&quot;:&quot;content-canvas&quot;,&quot;yLinkText&quot;:&quot;artificial intelligence&quot;}\" class=\"link \" rel=\"nofollow noopener\" target=\"_blank\">artificial intelligence<\/a>.<\/p>\n<p class=\"yf-1fy9kyt\">The networking and cybersecurity services provider will also lay off about 20% \u200bof staff due to greater use of AI tools, a move that Jefferies said could hurt near-term growth.<\/p>\n<p class=\"yf-1fy9kyt\">Following a 43% rally since its last quarterly results in February, analysts said expectations were high for the company, only for its \u200cforecast to flag slower growth \u2060as rising AI infrastructure costs squeeze margins.<\/p>\n<p class=\"yf-1fy9kyt\">Cloudflare said it expects revenue to increase up to about 30% in the second \u2060quarter, slower than the 33.5% growth recorded in the first quarter. Its adjusted gross margins shrank to a record low of 72.8% in the first quarter, \u200bfrom 77.1% \u200ba year ago.<\/p>\n<p class=\"yf-1fy9kyt\">&#8220;To protect its profitability, the \u200bfirm is trading higher infrastructure \u200ccosts and depreciation for salaries,&#8221; Morningstar senior equity analyst Malik Ahmed Khan said.<\/p>\n<p class=\"yf-1fy9kyt\">The AI-driven layoffs align Cloudflare with companies such as Jack Dorsey&#8217;s Block, which have said the technology could change how work is done by automating tasks such as coding.<\/p>\n<p class=\"yf-1fy9kyt\">But experts and tech executives, including OpenAI CEO Sam Altman, have \u200cwarned that companies are using AI as \u200bthe reason for job cuts they would have \u200bdone anyway.<\/p>\n<p class=\"yf-1fy9kyt\">Despite the share drop, \u200banalysts were broadly positive on Cloudflare after the results that \u200cincluded better-than-expected quarterly sales and an \u200bincreased annual revenue \u200bforecast.<\/p>\n<p class=\"yf-1fy9kyt\">The company&#8217;s services have proven crucial for users of AI tools such as the autonomous agent known as Openclaw.<\/p>\n<p class=\"yf-1fy9kyt\">About four brokerages raised their price \u200btargets on Cloudflare stock, \u200ctaking the median to $243.<\/p>\n<p class=\"yf-1fy9kyt\">Cloudflare&#8217;s 12-month forward price-to-earnings ratio is 198.93, compared \u200bwith CrowdStrike&#8217;s 95.57 and Palo Alto&#8217;s 50.13.<\/p>\n<p class=\"yf-1fy9kyt\">(Reporting by Harshita Mary Varghese \u200bin Bengaluru; Editing by Shilpi Majumdar)<\/p>\n","protected":false},"excerpt":{"rendered":"May 8 (Reuters) &#8211; Cloudflare shares tumbled more than 15% in premarket trading on Friday, after its quarterly&hellip;\n","protected":false},"author":2,"featured_media":418021,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,5306,363,364,16068,214852,111,139,69,16308,114587,145],"class_list":["post-418020","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-ai-infrastructure","tag-artificial-intelligence","tag-artificialintelligence","tag-cloudflare","tag-cloudflare-stock","tag-new-zealand","tag-newzealand","tag-nz","tag-premarket-trading","tag-quarterly-revenue","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/418020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=418020"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/418020\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/418021"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=418020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=418020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=418020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}