Cloudflare Shares Surge 16% After Earnings, Up 44% YTD Following 2026 Layoffs and AI Shift
Cloudflare reported second-quarter earnings on Thursday, with shares jumping more than 16% in after-hours trading. The stock is up 44% year-to-date, versus a 12% gain for the Russell 1000. The company's May 2026 move to cut about 20% of staff as part of an AI-agent-first strategy did not impede revenue and profit growth. CEO Matthew Prince said the quarter was strong, adding that machine-to-machine traffic is being fundamentally reshaped as the internet shifts toward AI answer engines and agent-based business models.
After the release of its quarterly results, Cloudflare shares rose more than 16% in after-hours trading on Thursday. The stock is now up 44% for the year to date, compared with a 12% gain for the Russell 1000 index over the same period.
Cloudflare announced in May 2026 that it would cut approximately one-fifth of its workforce, citing a shift to an operating model centred on AI agents. Second-quarter revenue and profit figures indicate that the layoffs and strategic pivot have not slowed business expansion. Chief Executive Matthew Prince said in a statement that the quarter performed well, and noted that as the internet transitions to AI answer engines and agent-driven business models, machine-to-machine traffic is undergoing a fundamental restructuring, with the company's network infrastructure positioned at a key node in this traffic evolution.
Performance within the cybersecurity industry is diverging. The widening gap in results across companies reflects structural changes taking place within the sector amid the AI wave.