Cloudflare’s stock price was remarkably positive after the market closed. Despite a massive broad-based market decline, the CDN provider’s stock has already more than recovered. That same sense of optimism was absent from Cloudflare CEO Matthew Prince’s description of bots as traffic generators. Although his company profits from them, most websites are actually worse off after a bot visits them.
Prince attributes this to the phenomenon that bots scour hundreds of sites and “reward” only one with a mention in an AI output or a product recommendation. The majority, therefore, derive “no benefit whatsoever” from these bot-driven transactions.
Cloudflare, however, does benefit, as it reported positive figures during its earnings call. Revenue rose 39 percent year-over-year in the third quarter to a record $782.5 million. After the market closed, the stock rose by about 15 percent, having previously fallen by more than 8 percent before the figures were released.
Traffic woes
Admittedly, search engines have always generated low-value traffic. However, the “Google-ification” of the internet was still a human-driven phenomenon: search queries and decisions to visit a site were predominantly made by humans, not bots or agents, if you will. According to the Cloudflare CEO, the scale is now entirely different. The company had previously predicted that bots would generate a thousand times as much traffic as human visitors, without this having a direct impact on a site’s visibility or brand awareness.
Cloudflare itself profits from this, since virtually all traffic is highly likely to pass through the company’s infrastructure. While it does offer products to block bots, limit their costs, or monetize AI traffic, that’s just a drop in the bucket. For example, customers can block AI bots for free, while publishers can charge crawlers for access via “Pay per Crawl.” That feature is still in private beta, by the way. Since July 1, about five percent of the web has signed up for the content protection products, Prince says. Meta is already a customer.
Containers are obsolete, according to Prince
During the Cloudflare earnings call, Prince made a striking statement about containers, as noted by The Register. He acknowledges that they were a significant improvement over bare metal and virtual machines, and that they have fueled the growth of hyperscalers. Still, he believes that the container architecture of hyperscalers and neoclouds cannot keep up with agentic workloads in a cost-effective manner. The alternative Prince recommends is, of course, Workers, Cloudflare’s own serverless service. The company recently built new features around it for agents, including Dynamic Workers, which are lightweight isolates for running AI-generated code.
Prince also shared his suspicion that the recently disclosed PHP2Shell vulnerability had been in circulation for years. Cloudflare is now combing through its logs for evidence of exploitation by hackers and state-sponsored actors. He expects to find examples of this. “I wish I could say that the worst is behind us, but that’s not the case,” he said. According to Prince, Cloudflare is often among the first to be quietly notified of new vulnerabilities, which makes sense, given its vast reach in blocking malicious traffic.