Market Favored Cloudflare (NET) as a Beneficiary of Agentic AI

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Soumya Eswaran

Wed, June 10, 2026 astatine 7:14 AM CDT 3 min read

Sands Capital Management, LLC released its Q1 2026 capitalist missive for its "Select Growth Strategy". A transcript of the missive is disposable to download here. Select Growth chiefly targets starring U.S. businesses, driving affirmative structural changes. U.S. large-cap maturation stocks fell successful the archetypal quarter. Sharp dispersion driven by AI advances marked the quarter, but precocious successful the quarter, geopolitical tensions with Iran caused a broad-based risk-off determination crossed the market. AI continued to power marketplace behavior, with AI-related investments expanding dispersion and shifting superior to asset-heavy sectors benefiting from AI infrastructure demand, which faced little disruption risk. While equities struggled, firm fundamentals remained strong. Select Growth underperformed the Russell 1000 Growth Index, returning -12.9% vs. -9.8%, owed to concerns astir AI disruption affecting assemblage and banal choices. The Strategy's absorption connected higher-growth, asset-light, work businesses faced challenges arsenic markets rotated toward much capital-intensive, lower-risk sectors. Underweights successful cyclical and antiaircraft sectors somewhat wounded comparative results amid the broader marketplace shift. In addition, delight cheque the Strategy's apical 5 holdings to cognize its champion picks successful 2026.

In its first-quarter 2026 capitalist letter, Sands Capital Select Growth Strategy highlighted Cloudflare, Inc. (NYSE:NET) arsenic a notable contributor. Cloudflare, Inc. (NYSE:NET) is simply a starring unreality services institution that offers a scope of services to businesses. On June 9, 2026, Cloudflare, Inc. (NYSE:NET) closed astatine $236.13 per share. One-month instrumentality of Cloudflare, Inc. (NYSE:NET) was 22.59%, and its shares gained 31.40% implicit the past 52 weeks. Cloudflare, Inc. (NYSE:NET) has a marketplace capitalization of $83.46 billion.

Sands Capital Select Growth Strategy stated the pursuing regarding Cloudflare, Inc. (NYSE:NET) successful its Q1 2026 capitalist letter:

"Cloudflare, Inc. (NYSE:NET) is simply a planetary unreality level that improves the security, performance, and reliability of websites and applications. Shares roseate during the 4th arsenic investors progressively viewed the institution arsenic a beneficiary of agentic AI, fixed its presumption astatine a cardinal power constituent for routing and securing machine-to-machine net traffic. While we bash spot Cloudflare arsenic a semipermanent beneficiary of AI broadly and the proliferation of agents specifically, we are much encouraged by improving endeavor income execution reflected successful caller results. Fourth-quarter 2025 gross maturation accelerated to 34 percent twelvemonth implicit year, up from 31 percent and 28 percent successful the anterior 2 quarters. New yearly declaration worth bookings accrued 50 percent, and income capableness expanded astatine the fastest gait since 2022, supporting continued momentum. New merchandise traction is besides contributing to results. Act 3 offerings, which absorption connected borderline computing, are gaining traction, portion an emerging Act 4 accidental centered connected mediating the agentic web could widen the company's maturation duration."

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