Baron Funds, an investment management company, released its “Baron Global Advantage Fund” investor letter for the second quarter of 2025. A copy of the letter can be downloaded here. In the second quarter, the fund returned 22.7% (Institutional Shares), compared to the MSCI ACWI Index’s (the Index) 11.5% gain and the MSCI ACWI Growth Index’s 17.3% gain. The Fund is up 11.2%, year-to-date, compared to gains of 10.1% and 9.3% for the benchmarks, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Baron Global Advantage Fund 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 8.29%, and its shares gained 173.87% of their value over the last 52 weeks. On August 4, 2025, Cloudflare, Inc. (NYSE:NET) stock closed at $208.80 per share, with a market capitalization of $72.763 billion.
Baron Global Advantage Fund stated the following regarding Cloudflare, Inc. (NYSE:NET) in its second quarter 2025 investor letter:
“Twenty of our investments posted quarterly gains of over 20%, while Cloudflare, Inc. (NYSE:NET), NVIDIA, Snowflake, Zscaler, CrowdStrike, and indie Semiconductor appreciated over 40% each. The shares of Cloudflare had a maximum drawdown of 45% during the first half, while we believe the intrinsic value of the business has only grown. Cloudflare is rapidly becoming a more important vendor for its customers with $1 million and $5 million customers growing 48% and 54% year-over-year, respectively, while the company also booked a milestone contract of over $130 million during the quarter. The company is seeing strong early success with its AI offering enabling customers to run AI models on top of Cloudflare’s global network. Cloudflare has a strategic advantage in having its network closer to end consumers, reducing latency which is critical for AI inferencing. Cloudflare Workers AI inference requests were up “nearly 4,000% year-on-year.” While the stock is expensive by any measure, we continue to believe that Cloudflare is an important company whose fundamentals continue to get stronger.
Cloudflare, Inc. offers enhanced security and performance for websites, applications, and software-as-a-service, and is increasingly well positioned to help power AI-enabled applications at the edge. Shares increased 74.4% after Cloudflare reported solid quarterly results, with revenues rising 27% year-over-year, slightly above expectations. Results were boosted by a $130 million-plus deal, the largest in the company’s history, driven by demand for its Workers platform, which allows developers to build and deploy applications at the edge for faster performance. The deal represented a competitive win, with the customer choosing Cloudflare over a major hyperscaler due to faster development time and better total cost of ownership. Cloudflare also continued to improve its go-to market execution, including stronger sales productivity, improved pipeline attainment, and solid customer growth. Management noted record additions of customers spending over $1 million and $5 million annually, while churn remained stable and dollar based net retention held steady at 111%. We continue to have high conviction in Cloudflare, given its differentiated platform, capable management team, and significant long-term growth opportunity.”
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 second quarter increased 28% year-over-year to $512.3 million. While we acknowledge the risk and potential of Cloudflare, Inc. (NYSE: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 time frame. If you are looking for an AI stock that is more promising than CLOUDFLARE, INC. (NYSE:NET) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Cloudflare, Inc. (NYSE:NET) and shared the list of unstoppable Artificial Intelligence (AI) stocks to buy. In addition, please check out our hedge fund investor letters Q2 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.
