Cloudflare (NET) Surged on Gaining Investors’ Confidence

Sands Capital, an investment management company, released its “Sands Capital Select Growth Strategy” Q1 2025 investor letter. A copy of the letter can be downloaded here. Select Growth Strategy primarily targets U.S. companies that are leading the way in crucial areas of positive structural transformation within the economy. U.S. growth equities, tracked by the Russell 1000 Growth Index, experienced their poorest quarterly performance since 2022, significantly lagging behind U.S. value equities, represented by the Russell 1000 Value Index, in the widest gap observed since 2001. The strategy slightly underperformed the Russell 1000 Growth Index in the quarter. You can check the fund’s top 5 holdings to know more about its best picks for 2025.

In its first-quarter 2025 investor letter, Sands Capital Select Growth Strategy highlighted stocks such as Cloudflare, Inc. (NYSE:NET). Cloudflare, Inc. (NYSE:NET) is a cloud services provider that delivers a range of services to businesses worldwide. The one-month return of Cloudflare, Inc. (NYSE:NET) was 33.10%, and its shares gained 146.02% of their value over the last 52 weeks. On May 30, 2025, Cloudflare, Inc. (NYSE:NET) stock closed at $165.89 per share with a market capitalization of $57.499 billion.

Sands Capital Select Growth Strategy stated the following regarding Cloudflare, Inc. (NYSE:NET) in its Q1 2025 investor letter:

“Cloudflare, Inc. (NYSE:NET) is an emerging network-as-a-service and edge computing leader. Shares rallied during the quarter as investors gained confidence in the company’s improving enterprise sales execution and recognized its potential as a key beneficiary of AI inference growth. Lower inference costs could accelerate AI application deployment, increasing demand for Cloudflare’s Workers edge computing platform. We attended the company’s analyst day in March and came away encouraged by its focus on strengthening both enterprise and developer go-to-market efforts. Notably, the renewed emphasis on developer adoption for Workers could begin contributing meaningfully to the business sooner than we had previously expected.”

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Cloudflare, Inc. (NYSE:NET) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held Cloudflare, Inc. (NYSE:NET) at the end of the first quarter, which was 55 in the previous quarter. Cloudflare, Inc.’s (NYSE:NET) revenue for the first quarter increased 27% year-over-year to $479.1 million. While we acknowledge the potential of Cloudflare, Inc. (NYSE:NET) as an investment, our conviction lies in the belief that 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 NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Cloudflare, Inc. (NYSE:NET) and shared Jim Cramer’s successful stock predictions. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.