Cloudflare could be a “massive AI play”, Nick Mersch says

Purpose Investments portfolio manager Nick Mersch named Cloudflare  (Cloudflare Stock Quote, Chart, News, Analysts, Financials NYSE:NET) as a top pick during an appearance on BNN Bloomberg’s Market Call on Aug. 21, citing the company’s infrastructure role in the growing AI economy.

“Cloudflare started off as what’s called a content delivery network (CDN), essentially helping move packets of data across cloud platforms whenever someone visits a website,” Mersch said. “At one point Cloudflare was responsible for about 20% of all website traffic. When everything moved online during COVID, the company had to pivot quickly to meet that challenge.”

He noted that Cloudflare plays a key role in preventing malicious attacks that can overwhelm websites.

“If you crash an e-commerce company’s website, you lose a sale,” he said. “If you crash a booking site, the customer just goes to a competitor. Cloudflare provides the plumbing behind the scenes that makes the Internet work.”

He added that the company is now pushing further into edge computing and positioning itself in the AI market. He pointed to the ability of large media organizations, such as The New York Times, to secure licensing deals with AI companies, while smaller publishers and individual content creators risk having their work scraped without compensation.

“With Cloudflare, they sit on top of that traffic as an intermediary and can help monetize it,” the fund manager said.

“They’re being very vocal about this, and I think there’s a massive AI play here,” Mersch said. “It’s going to be exciting.”

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