Cloudflare Outpaces Nvidia: AI Stock to Watch in 2025

Published Date : 21/09/2025 

While Nvidia has been a top performer in the AI sector, Cloudflare is making waves with its global GPU network and aggressive AI expansion. Here’s why this stock is outpacing Nvidia and showing no signs of slowing down. 

This cloud computing stock has more than doubled in 2025, and it still has room to rise.

Nvidia, which pioneered the artificial intelligence (AI) accelerator chip space, has been one of the top performing stocks on the market in the past three years, delivering gains of more than 1,200% on the back of the remarkably strong demand for its graphics processing units (GPUs), which are widely used for training AI models and running inference applications.

That's why Nvidia's returns of 32% so far in 2025 may appear lukewarm to investors. After all, with a market cap in excess of $4.3 trillion, it is now the world's largest company. So, expecting Nvidia to replicate the eye-popping returns that it has clocked in recent years isn't reasonable, especially considering that its growth rate, though healthy, is relatively slower than it was before.

However, there are smaller companies out there capitalizing on the fast-growing demand for AI hardware that can still deliver phenomenal returns to investors. One of these is Cloudflare, which has significantly outperformed Nvidia so far this year — it's up by a remarkable 110% — and has the potential to fly higher.

Cloudflare was traditionally known for offering content delivery network (CDN) services and a reverse proxy network that helps make internet connections faster, secure, and more reliable. Its cloud security solutions also secure data across public cloud networks, private cloud networks, and software-as-a-service (SaaS) applications, among other systems.

However, the AI trend has helped it unlock a lucrative growth avenue. It is now leveraging its massive global network of servers to deploy graphics processing units (GPUs) and bring edge AI processing capabilities to its customers. The company's network spans 300 cities, and management said last year that the entire network would be equipped with GPUs to run AI inference applications closer to end users, which will help reduce latency and improve performance.

Based on what management said on the company's latest earnings conference call, Cloudflare has achieved that goal. And demand for its Workers AI serverless GPU platform — which allows customers to run AI models on Cloudflare's network and forego investing in and managing expensive hardware — has been solid.

Cloudflare customers can access more than 50 AI models on the Workers AI platform to build applications based on their needs. They can also store large datasets on the Cloudflare network at competitive costs. Importantly, Workers AI has a pay-as-you-go business model, so customers aren't locked into subscription contracts.

This consumption-oriented model is working well for Cloudflare as it helps the company lower the barrier to entry for companies looking to run AI inference in the cloud. The company landed several multimillion-dollar contracts for Workers AI in the second quarter, which explains the impressive 39% year-over-year increase in its remaining performance obligations (RPO) to almost $2 billion.

This metric refers to the total value of a company's unfulfilled contracts, and it's worth noting that Cloudflare's RPO growth substantially exceeded the 28% year-over-year spike in its Q2 revenue to $512 million. What this means is that Cloudflare is landing new contracts at a faster pace, setting up a nice revenue pipeline for the long run that should lead to accelerating top-line growth. Moreover, the analysts at Fortune Business Insights forecast that demand for edge AI will increase at an impressive annualized rate of 33% through 2032.

In that context, I won't be surprised to see Cloudflare's revenue pipeline improve further, especially considering that there is a tremendous need for GPU-powered AI cloud computing capacity.

But is the stock worth buying following its phenomenal surge?

Cloudflare's big rally so far in 2025 has left it trading at 40 times sales. That's expensive when compared to Nvidia's price-to-sales ratio of 26. However, Cloudflare's RPO growth is accelerating. The company reported a 37% year-over-year increase in the metric in Q2 2024, indicating that its future revenue pipeline growth is ticking up.

As a result, it wouldn't be surprising to see Cloudflare's top-line growth accelerate in the future — which is precisely what analysts are predicting.

For some perspective, Nvidia's top-line growth rate is expected to slow down. So, there is a good chance that Cloudflare may be able to justify its expensive sales multiple by clocking faster growth than the AI chip leader. That's why investors who have a tolerance for risk and a willingness to pay a premium valuation for this AI stock should consider accumulating it, even after its remarkable rally this year. 

Frequently Asked Questions (FAQS): 

Q: What is Cloudflare's main focus in the AI market?

A: Cloudflare is focusing on building a global GPU network to bring edge AI processing capabilities to its customers, leveraging its massive network of servers spanning 300 cities.

Q: How does Cloudflare's Workers AI platform work?

A: Cloudflare's Workers AI platform allows customers to run AI models on Cloudflare's network without investing in and managing expensive hardware. It offers a pay-as-you-go business model and access to over 50 AI models.

Q: What is Cloudflare's remaining performance obligations (RPO) and why is it important?

A: Cloudflare's RPO refers to the total value of unfulfilled contracts. A significant increase in RPO indicates strong future revenue potential, as the company is landing new contracts at a faster pace.

Q: How does Cloudflare's valuation compare to Nvidia's?

A: Cloudflare is trading at 40 times sales, which is higher than Nvidia's price-to-sales ratio of 26. However, Cloudflare's accelerating RPO growth suggests it may justify its higher valuation with faster growth.

Q: What is the forecast for the edge AI market?

A: Analysts at Fortune Business Insights forecast that demand for edge AI will increase at an impressive annualized rate of 33% through 2032, indicating significant growth potential for companies like Cloudflare. 

More Related Topics :