Cloudflare (NET) could give investors more confidence in its margin recovery, platform growth, Edge AI plans, Agentic Web opportunity, and long-term revenue model at its June 9 investor day, Morgan Stanley said in a note Thursday.
The investment firm said it expects management to explain how gross margins can move back toward the 75% to 77% range while operating leverage improves over time, and Cloudflare may also give more details on platform use, Workers growth, Pool of Funds deals, and the share of revenue coming from consumption-based products.
Cloudflare's global network could help the company defend its position and expand into newer areas such as Edge AI and agent-based internet tools, though Morgan Stanley said it expects more details on how Cloudflare plans to make money from Workers, AI infrastructure, agent workflows, content monetization, and newer internet business models.
Cloudflare's recent workforce reduction, better sales productivity, channel growth, and wider use of AI inside the company could support higher long-term operating margins, according to the note.
Morgan Stanley kept its overweight rating for Cloudflare and raised its price target to $305 from $245.
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