What happened
Cloudflare (NET 1.44%) stock is making big gains this week. The cybersecurity and web services company's share price was up 22.7% from last week's market close as of 1:45 p.m. ET this Friday, according to data from S&P Global Market Intelligence.
After suffering a pig pullback last week due to risk-off sentiment rocking the market, Cloudflare stock is soaring this week thanks to perceptions of lessening risks related to the war in Ukraine and the Federal Reserve raising interest rates. The company's stock has also gotten a big boost from the announcement of an expanded partnership with CrowdStrike Holdings.
Image source: Getty Images.
So what
Russian and Ukrainian officials made comments this week suggesting that the two sides were making progress on a compromise, and the Fed's interest rate decision paved the way for Cloudflare and other growth stocks to see a sustained bullish upswing. At its meeting on Wednesday, the U.S. central bank raised interest rates for the first time since 2018, but the quarter-point increase was below the half-point raise that some investors had feared.
Cloudflare kept the positive catalysts coming with an announcement on Thursday that it was expanding its partnership with CrowdStrike in order to bring zero-trust security to devices, applications, and networks. CrowdStrike is a leader in the endpoint-device security space and provides cloud-based software to prevent mobile devices, computers, servers, and other hardware from being used as weak points to attack internet networks. The companies are both at the top of their respective categories in the cybersecurity and web services markets, and the team-up could help both companies accelerate their growth trajectories and fortify already strong competitive positions.
Now what
A resolution to the war in Ukraine could help power more bullish momentum for Cloudflare, but investors should know that the outlook on that front remains uncertain, and the company's stock could continue to see volatile swings in the near term. While growth stocks have regained significant ground in this week's trading, investors are still generally much more hesitant to back companies trading at high price-to-sales multiples than they were at the end of last year. On the other hand, Cloudflare is a leading provider of services that help keep websites and applications functioning smoothly, and it looks positioned to benefit from the long-term growth of internet communications.
