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Cloudflare jumps as MoffettNathanson points to ChatGPT links and AI opportunities

By Sam Boughedda

Cloudflare (NYSE:NET) jumped over 12% Thursday after a research note from MoffettNathanson said the company has a massive opportunity in supporting AI workloads.

Analysts told investors in the note that looking at the recent rapid rise in AI interest, they believe it will "far outweigh" any Cloudflare bear concerns regarding its exposure to struggling crypto exchanges over the last twelve months.

They said that Cloudflare's crypto exchange customers include Coinbase (NASDAQ:COIN), FTX, Bitfinex, WazirX, and OKX. They added that with the FTX woes well publicized, other firms have been negatively impacted by falling cryptocurrency prices.

"Our view is that this fixation on the crypto exposure has overshadowed two massive opportunities for Cloudflare that we believe are underappreciated: 1) supporting AI workloads and 2) Apple's (NASDAQ:AAPL, Not Rated) iCloud Private Relay, which is out of beta. We believe these two opportunities can ultimately dwarf the declines in crypto exchange revenue," wrote the analysts.

The analysts went on to state that while ChatGPT and the investment from Microsoft (NASDAQ:MSFT) have dominated headlines, investors might have missed that the "performance and security" of chat.openai.com is done by Cloudflare.

"We think there is a substantial opportunity for Cloudflare to support ChatGPT and other AI workloads," the analysts argued.

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