Cloudflare, Inc., a leading cloud services and internet infrastructure company, on Tuesday raised its revenue forecast for the year 2026, reporting stronger quarterly results than expected and highlighting increased demand for artificial intelligence-related cloud services.

Revenue Forecast Beats Expectations

Cloudflare projected its 2026 annual revenue to be between $2.79 billion and $2.80 billion, surpassing analysts’ expectations of around $2.74 billion. For the first quarter of 2026, the company forecasted revenue of $620 million to $621 million, slightly higher than market predictions of $613.9 million.

Quarterly Results Stronger Than Predicted

The company reported $614.5 million in revenue for the December quarter, representing a 33.6% increase compared with the same period last year. This performance exceeded estimates of about $591.3 million. Cloudflare also saw its net loss narrow to $12.1 million, improved from a loss of $12.8 million a year earlier.

AI Adoption Driving Cloud Demand

Chief Executive Officer Matthew Prince attributed the positive outlook to the ongoing adoption of artificial intelligence by businesses and developers worldwide. Prince said that as companies integrate AI into their products and operations, demand for secure and scalable cloud infrastructure, such as Cloudflare’s offering,s continues to rise.

Stock Reaction and Market Confidence

Following the forecast and quarterly results, Cloudflare’s stock price jumped nearly 12% in extended trading, signaling strong investor confidence. While the company’s shares have declined more than 8% so far this year, they had previously gained over 80% in 2025, reflecting optimism in cloud and AI-related markets.

Challenges and Future Outlook

The company’s upgraded outlook comes after a significant system outage in November that disrupted access to popular online platforms and raised concerns about network reliability. However, Cloudflare’s recent performance has reassured investors and analysts about its growth prospects, particularly as enterprises continue to spend on cloud and AI infrastructure.