Cloudflare's Data Platform Expands: Is Basin the Next Growth Driver?
Cloudflare NET is expanding its platform with the launch of Basin, a data platform designed to help developers and enterprises collect, store and analyze data without managing dedicated servers. Basin is built on Apache Iceberg and Cloudflare R2, allowing customers to work with data using tools they already use. It also removes data transfer fees between clouds. By making data management simpler and reducing infrastructure costs, Basin could help Cloudflare attract more developers and enterprises to its platform.
Basin is designed to address some of the main challenges of running a modern data stack. Traditional data platforms often require dedicated servers, multiple systems and significant data movement, which can increase costs and complexity. Basin uses a serverless model, allowing teams to ingest, organize and query data on demand through Cloudflare’s network. This could make data analytics more accessible to smaller teams that may not have large data engineering resources.
The launch also strengthens Cloudflare’s position in AI-related workloads, which increasingly depend on large amounts of data. Basin allows customers to store and analyze data in an open format without locking it to one provider. This can be useful for businesses building AI applications that need to access data across different tools, clouds and regions. Cloudflare is therefore expanding from providing the infrastructure to run applications toward helping customers manage the data that supports those applications.
Basin’s early customer feedback points to demand for a simpler data architecture. Cloudflare highlighted customers such as Anomaly, the company behind the open-source AI coding agent OpenCode, that moved its entire data pipeline to Basin, replacing an AWS S3 and Athena setup. Further, Bobsled, a data platform company, is also using Basin to make its data available across major data and AI platforms while avoiding egress fees. As more companies build AI and cloud applications, Basin could give Cloudflare another way to increase platform usage and expand its addressable market.
Cloudflare Faces Tough Competition
Competitors like Palo Alto Networks PANW and Zscaler ZS are also gaining ground through platform expansion and AI innovation.
Palo Alto Networks is benefiting from the broader shift toward AI as enterprises expand their security and infrastructure needs. The company is using its platformization strategy to combine network security, SASE and AI security, encouraging customers to consolidate more products on one platform. In fiscal 2026, PANW displaced legacy vendors in nearly 100 accounts worth more than $400 million in total contract value. As enterprises add more AI infrastructure and workloads, PANW can expand across more security layers and increase spending within existing enterprise accounts.
Zscaler is benefiting as enterprises extend Zero Trust beyond traditional users to AI applications, workloads and agents. Its Security for AI offering helps customers secure AI models, control agent access and protect sensitive data, while its broader Zero Trust platform can cover users, branches and cloud workloads. In fiscal 2026, Security for AI bookings increased more than 50% sequentially in the fourth quarter, while ARR from non-seat-based solutions grew more than 100% year over year. As AI adoption expands, ZS can use its broader platform to increase customer adoption and capture more enterprise security spending.
NET’s Price Performance, Valuation & Estimates
Shares of Cloudflare have jumped 80% in the year-to-date period compared with the Zacks Internet – Software industry’s return of 8.5%.
NET YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NET trades at a forward price-to-sales ratio of 35.81, significantly higher than the industry’s average of 4.44. The Zacks Value Score of F suggests that NET stock is overvalued.
NET Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NET’s 2026 earnings is pegged at $1.26 per share, unchanged over the past 30 days, indicating a 35.5% increase from the previous year.
Image Source: Zacks Investment Research
Cloudflare currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
