Given how much people have started actively looking for alternatives, and how much spray-and-pray Cloudflare's offerings now seem with so many launches every few weeks, steal is a bit too optimistic.
Cloudflare is not competing with app builders like Lovable or Repl though. They are the underlying infrastructure for companies like that. This is why they will win in the AI era.
They're saying that it's trivial for Cloudflare to go up the stack (build Replit) while it's non-trivial for Replit to go down the stack (build Cloudflare).
And the reason for Cloudflare to do it is because there are several (apparently) very juicy businesses to be built by slapping a chat UI and off the shelf coding agent on top of Cloudflare infra... Not saying they should do this, but the rationale is pretty self-evident.
The reason for Replit to try going down the stack is platform risk and compressing margins from competitors who also have the brilliant idea of slapping a text box and off the shelf coding agents onto Cloudflare.
In an April 2002 interview with Bloomberg Businessweek, Scott McNealy, then CEO of Sun Microsystems, reflected on investors paying 10x revenue for Sun stock at its dot-com peak ($64/share in 2000):
At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
Now this analysis is imperfect... but it's good enough.
Ever looked at MSFT or AAPL’s dividends? It’s a token “here’s your fucking dividend, now go away” percentage. (I’m sure it’s actually to placate funds that require a dividend, but I repeat myself.)
Democrats are not going to try and stop AI or rein in AI. There is too much money at stake. They'll pass some regulations, sure, some data center rollouts might be blocked or modified, but they aren't going to stop the train.
They don't have to. This particular train explodes on its own if it drop below 100 mph.
Even tepid regulation will destroy the "our TIA is the entire observable universe due to the potential of self replicating AI probes so we totally deserve 10 trillion dollars in investor capital" trade
They're not even going to do that. Trump isn't going to sign that. When was the last time Congress overrode a veto or played hardball (well the Democratic side anyway)? They have no fight in them.
Personally, I think that the idea that market always recovers is so widespread right now that it'll take some serious financial hardships for people to start selling instead of buying the dip.
Cloudflare is a steal at $240 IMO.
Regardless of what happens to the AI models, you will still need protection a decade from now.
Not to mention the most comprehensive platform to use with AI, they will inevitably eat Lovable / Repl's lunch.
It looks like Cloudflare generates $633mm operating cash flow a year, up 5% for TTM from 2025 [1]. I’m surprised that’s supporting a $95bn market cap.
[1] https://finance.yahoo.com/quote/NET/cash-flow/
Given how much people have started actively looking for alternatives, and how much spray-and-pray Cloudflare's offerings now seem with so many launches every few weeks, steal is a bit too optimistic.
Cloudflare is not competing with app builders like Lovable or Repl though. They are the underlying infrastructure for companies like that. This is why they will win in the AI era.
Lovable is hosted on Cloudflare: https://x.com/CloudflareDev/status/2113651157721600492
They're saying that it's trivial for Cloudflare to go up the stack (build Replit) while it's non-trivial for Replit to go down the stack (build Cloudflare).
It's trivial for those providing internet links to go up the stack and cloud data centers but they typically don't.
Staying in your lane is often a better choice.
Maybe expanding through acquisition is the best of both worlds. So replit might be bought.
I'm not expressing an opinion on whether they should or shouldn't.
Why would either of them do either of those? They seem to be different businesses.
Network effects make it harder for Cloudflare to build Replit than it might seem, too.
What network effects?
And the reason for Cloudflare to do it is because there are several (apparently) very juicy businesses to be built by slapping a chat UI and off the shelf coding agent on top of Cloudflare infra... Not saying they should do this, but the rationale is pretty self-evident.
The reason for Replit to try going down the stack is platform risk and compressing margins from competitors who also have the brilliant idea of slapping a text box and off the shelf coding agents onto Cloudflare.
In an April 2002 interview with Bloomberg Businessweek, Scott McNealy, then CEO of Sun Microsystems, reflected on investors paying 10x revenue for Sun stock at its dot-com peak ($64/share in 2000):
At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes, which is very hard. And that assumes you pay no taxes on your dividends, which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don't need any transparency. You don't need any footnotes. What were you thinking?
Now this analysis is imperfect... but it's good enough.
For reference Cloudflare trades at 39x revenue
[delayed]
"In the short term the market is a popularity contest; in the long term it is a weighing machine." - Warren Buffett
Here's the valuation though. Percentage of total web traffic going through Cloudflare.
- 2016 ~3.9%
- 2017 ~5.3%
- 2018 ~6.6%
- 2019 ~7.6%
- 2020 ~11.2%
- 2021 ~15.4%
- 2022 ~19.4%
- 2023 ~18.0%
- 2024 ~18.9%
- 2025 ~19.2%
- 2026 (early) ~20.9% (with later snapshots higher, up to the mid-to-high 20s)
Combine that with consistently excellent execution and popularity, you get the valuation.
That analysis completely neglects growth.
Obviously you wouldn't pay 10x revenue if you expect revenue to be flat for the next 10 years.
No wonder that company no longer exists with a CEO that doesn't get that.
Cloudflare's growth is capped to 100% of internet traffic. it's already at 20%.
A tech stock paying dividends? It'll never happen.
hehe
https://giftarticle.ft.com/giftarticle/actions/redeem/8605e6...
Uh.. The big guys do.
Ever looked at MSFT or AAPL’s dividends? It’s a token “here’s your fucking dividend, now go away” percentage. (I’m sure it’s actually to placate funds that require a dividend, but I repeat myself.)
Yeah, but they just do that for inclusion into some investment products that require a dividend.
Share buybacks are always better for the company and investors.
You selling?
Election euphoria and hangovers,
Sobriety the following day,
$8,000 for a video card,
Empty boxes on Christmas day.
Can't even rhyme without AI anymore.
Texas: so much spent
Wind blows over clear acres
Buildouts are now dead?
Nvidia got my money,
Micron a little as well,
AI corps with their hands out ?
they can go to hell. :}
Got me a 3090
Cost me 3090
Dunno why I did dis
Guess let's try and see
Democrats are not going to try and stop AI or rein in AI. There is too much money at stake. They'll pass some regulations, sure, some data center rollouts might be blocked or modified, but they aren't going to stop the train.
They don't have to. This particular train explodes on its own if it drop below 100 mph.
Even tepid regulation will destroy the "our TIA is the entire observable universe due to the potential of self replicating AI probes so we totally deserve 10 trillion dollars in investor capital" trade
They're not even going to do that. Trump isn't going to sign that. When was the last time Congress overrode a veto or played hardball (well the Democratic side anyway)? They have no fight in them.
The beginning of the AI bubble's dotcom-style crash.
Accurate. [0]
[0] https://news.ycombinator.com/item?id=45960032
Keep calling it. You'll get it right one day.
Personally, I think that the idea that market always recovers is so widespread right now that it'll take some serious financial hardships for people to start selling instead of buying the dip.