- Bolstered by strong competitive advantages and secular demand backdrops, Cloudflare and Zscaler seem destined for new all-time highs.
- Both companies are delivering best-in-class growth, winning large enterprise customers, and harnessing AI to boost their platforms’ advantages.
- Consequently, these cloud disruptors represent promising candidates for investors aiming to capture further upside amid the Nasdaq’s record-setting rally.
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The has been on a tear, recently hitting record closing highs fuelled by a potent mix of investor optimism, technological innovation, and macroeconomic tailwinds.
Source: Investing.com
Riding this wave are two cybersecurity and cloud infrastructure powerhouses, Cloudflare (NYSE:) and Zscaler (NASDAQ:), both of which have delivered stellar year-to-date (YTD) performances and are closing in on their all-time highs.
Here’s why these names are breaking out—and what’s next.
1. Cloudflare: Riding the Digital Transformation Wave
- YTD Rally: +73.1%
- Current Price: $186.43
- All-Time High: $221.64 (Nov. 18, 2021)
Cloudflare’s stock has been a standout performer in 2025, climbing around 73% in the year-to-date, underpinned by its position as a leader in web infrastructure, cloud security, and edge computing. NET stock closed at $186.43 last night, just 15.8% below its all-time high of $221.64, set on November 18, 2021.
Source: Investing.com
The rally in Cloudflare’s stock can be attributed to several key factors. First, the increasing demand for internet security and performance-enhancing solutions has positioned Cloudflare as a critical player in the cloud security and web infrastructure space. Its edge network processes 57 million HTTP requests per second.
Furthermore, the rise of digital transformation initiatives across industries is fuelling growth in Cloudflare’s customer base. Demand is exploding for the company’s Zero Trust security suite and AI inference tools, which enable companies to run large language models (LLMs) closer to end-users.
Looking ahead, tailwinds such as increasing cyber threats, the global push for digital transformation, and Cloudflare’s ongoing innovation in AI-driven security tools are expected to sustain its momentum. Analysts also point to the company’s international expansion and strategic partnerships as catalysts that could drive shares to a new all-time high in the near term.
Source: InvestingPro
Despite a premium valuation (forward P/S ratio of 30.9), Cloudflare’s strong fundamentals and market leadership suggest it could surpass its previous high if it maintains execution excellence and capitalizes on AI and cybersecurity tailwinds.
2. Zscaler: Nearing All-Time Highs on Cybersecurity Momentum
- YTD Rally: +70.9%
- Current Price: $308.46
- All-Time High: $376.11 (Nov. 19, 2021)
Similarly, Zscaler, a pioneer in cloud-based security solutions, is riding the wave of the Nasdaq’s rally with equally compelling performance. Year-to-date, Zscaler’s stock has risen by approximately 71%, showcasing its strength in a competitive cybersecurity landscape. Shares are currently trading about 18% below their record high of $376.11, achieved in November 2021, but its upward trajectory suggests that milestone could soon be within reach.
Source: Investing.com
The rally in Zscaler shares is largely driven by explosive demand for its cloud-native security platform, which securely connects users to applications, as enterprises abandon legacy firewalls for AI-powered Zero Trust models. The cybersecurity juggernaut also continues to benefit from strategic partnerships and tighter platform integration with hyperscalers like Amazon’s AWS and Alphabet’s Google Cloud.
Additionally, Zscaler is benefiting as headwinds facing legacy SSL VPN appliance vendors drive increased deal flow toward its disruptive SASE architecture.
These elements, combined with rising regulatory requirements for data protection and the persistent escalation of ransomware and other cyber threats, create a compelling case for Zscaler. Moreover, the company’s investments in AI and machine learning to enhance threat detection, coupled with its expanding footprint in emerging markets, are seen as significant growth drivers.
Source: InvestingPro
With the Nasdaq providing a favorable backdrop for tech stocks, Zscaler’s path to a new all-time high appears increasingly likely as investor appetite for cybersecurity exposure remains strong.
Bottom Line
Cloudflare and Zscaler aren’t just riding the Nasdaq’s coattails—they’re leading the charge in a cybersecurity arms race that has no end in sight. While lofty valuations warrant caution, the combination of robust fundamentals, enterprise adoption, and a favorable market backdrop suggests both stocks are well-positioned to potentially reach new record highs in the near future.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the Invesco QQQ Trust ETF (QQQ). I am also long on the Invesco Top QQQ ETF (QBIG), and Invesco S&P 500 Equal Weight ETF (RSP).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.