Cloud services provider Cloudflare (NET) is rallying 8% today after Truist, a bank, raised its price target on NET stock.

Why Truist Is Bullish on NET

The bank increased its price target on NET to $140 from $120, with the shares currently trading around $137. Truist believes that NET delivered "solid" third-quarter earnings and noted that its Q3 results came in above analysts' average estimates.

A technical analyst using a cloud-based analytics dashboard for financial services.

What's more, noting that Cloudflare had for the first time made a major deal involving the incorporation of AI into its Workers software, the bank expects NET to get a big boost from AI over the long term. NET's Workers software is used to facilitate the development of apps.

Additionally, the company's "sales productivity" has rebounded in recent quarters and is now higher than at any point since 2022, Truist reported.

TD Cowen Was Also Upbeat on NET Recently

More of NET's customers are interested in conducting AI inference using its software, and NET is making "sizeable" deals involving the version of Workers that's equipped with AI, TD Cowen reported on Jan. 23. Cloudflare can continuously grow at a compound annual growth rate of 30%, according to the bank.

The Recent Price Action of NET

In the last month, the shares have climbed 28%, while they have soared 53% in the last three months.

While we acknowledge the potential of NET, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.