We recently compiled a list of the 15 Software Infrastructure Stocks Outperforming In 2025. In this article, we are going to take a look at where Cloudflare, Inc. (NYSE:NET) stands against the other software infrastructure stocks.
Software stocks had a troubling end to the last year and some even continued to fall during January. After a solid year, profit-taking would have been acceptable. However, the continuous decline in January had investors worried, with some media personalities calling it the end of software stocks.
It didn’t take the market long to change its views though. In general, software stocks are not as negatively impacted by tariffs as hardware stocks. Since Trump took over, people have been evaluating their options and with tariffs on the horizon, found software to be a relatively safe sector.
There were some concerns on the AI front as well. The emergence of DeepSeek AI has meant that companies in the US may not be willing to spend more on their AI ventures. Similarly, businesses could simply use DeepSeek’s much cheaper technology, causing downward pressure on subscription prices for instance. So far, none of this looks like becoming a reality, so on the back of solid earnings, most software stocks have comfortably outperformed the market.
We decided to take a look at the top 15 stocks that are outperforming the market so far this year. To come up with our list of 15 software infrastructure stocks outperforming in 2025, we only considered stocks with a market cap of at least 2 billion that were outpacing the broader market till the end of last week.
A close-up of a server array powering a cloud-services system.
Cloudflare, Inc. (NYSE:NET)
Cloudflare, Inc. is a cloud services company that provides a variety of services to businesses. It offers an integrated cloud-based security solution and website & application security products. The stock is up 54% this year and it has a lot to do with the company’s recent quarterly performance.
NET is a high-quality company and while such companies tend to give better returns, they are almost never available at a cheap valuation. The company registered another quarter with sequential growth but the bigger question for investors is how long can the company maintain a 30%+ growth rate.
Many analysts are bullish on the company’s stock. JMP Securities upped its price target from $135 to $180 while Morgan Stanley boosted its target from $140 to $154. Needham’s $185 price target confirms the broader trend of bullishness but investors may need to keep one thing in mind. As strong as the company is, it has a rather fragile balance sheet. This means that if something goes wrong, it will have less room to maneuver. But for now, everyone is attaching a premium to the company’s valuation despite these risks.
Overall NET ranks 4th on our list of the software infrastructure stocks outperforming in 2025. While we acknowledge the potential of NET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
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