10 Best Performing Software Stocks to Buy According to Analysts

2. Cloudflare Inc. (NYSE:NET)

YTD returns: 33%

Potential Upside: 12%

Number of Hedge Fund Holders: 55

Cloudflare Inc. (NYSE:NET) runs a global connectivity cloud network that helps make websites, apps, and business systems faster, safer, and more reliable. It protects against cyberattacks, speeds up website loading times, and ensures secure access to online services. Its key offerings include content delivery networks (CDN), distributed denial-of-service (DDoS) protection, zero-trust security solutions, and web performance optimization.

Cloudflare Inc. (NYSE:NET) is up 33% YTD. The company continued to benefit from the increasing need for cybersecurity, zero-trust security frameworks, and edge computing solutions. Apart from this, the reason for the strong YTD performance was the Q4 2024 results on February 6, which exceeded expectations. Revenue for the quarter rose up 27% YoY to around $460 million, 2% above consensus. EPS of $0.19 came in 5% ahead of expectations. Company guidance was mixed but profitability in FY 2025 is expected to be better.

After the results, analysts from Argus have reiterated their Buy rating with a higher price target of $205, up from $108 earlier. The analysts are optimistic from the ongoing restructuring which has started to show results, in his view, with improved sales productivity and profitability.