By Reuters

(Reuters) - Cloudflare shares rose before the bell on Friday after the cloud services firm raised its annual ‌forecasts, betting that resilient AI-driven demand will sustain traffic across ‌its network.

Quarterly results of Cloudflare, whose shares were last up 16.2% at $330.51, follow ​Amazon.com's strongest cloud growth in more than four years. Amazon noted that it won't have enough capacity to meet all demand in 2026.

The two reports underscore that software companies remain key winners of the ‌ongoing scramble to build AI ⁠infrastructure.

Cloudflare now expects full-year revenue of $2.86 billion to $2.87 billion, up from its prior expectation of $2.805 billion to $2.813 ⁠billion. The new forecast, released after markets closed on Thursday, exceeds analysts' average estimate of $2.81 billion, according to LSEG-compiled data.

Analysts at Morgan Stanley ​said the ​company's Workers developer platform was ​its fastest-growing segment, amid a ‌shift toward a usage-based model, expecting the company to exceed its outlook.

Cloudflare's also increased its adjusted per share earnings forecast to a range of $1.25 to $1.26 from its earlier estimate of $1.19 to $1.20.

Analysts also highlight that Cloudflare stands to benefit as cybersecurity becomes more necessary as ‌cutting-edge AI models reshape the cyber-risk landscape.

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Cloudflare ​shares have gained over 44% so ​far this year, compared ​with a near-77% rise in rival CrowdStrike and a ‌95% jump in Palo Alto Networks. ​The stock trades ​at over 190 times its forward price-to-earnings ratio, compared with over 145 for CrowdStrike, according to LSEG-compiled data.

The company, analysts ​at RBC Capital ‌Markets note, "has multiple, durable avenues to AI-monetization over the long-to-medium ​term that warrants a premium valuation."

(Reporting by Purvi Agarwal ​in Bengaluru; Editing by Joyjeet Das)

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