Investing.com -- Wells Fargo said in a note Tuesday that Cloudflare (NYSE:NET) is its top software infrastructure pick for 2025, citing its strong positioning amidst key market transitions and a promising outlook for revenue growth and margin expansion.
According to the bank, Cloudflare is "well-positioned to consistently outperform revenue expectations throughout 2025," thanks to its diverse platform and underappreciated growth drivers like SASE, Workers, and Workers AI.
The analysts at Wells Fargo (NYSE:WFC) anticipate a stronger spending environment in 2025, driven by the evolution of cybersecurity and the ongoing adoption of GenAI.
They note, "We believe data backup is evolving into cyber resilience," and highlight the shift toward Zero Trust and increased automation in the cybersecurity market.
A recent CIO survey conducted by Wells Fargo is said to have revealed an expected 6.3% year-over-year increase in IT budgets for 2025, up from 4.9% in 2024.
The bank says the survey underscores the importance of cybersecurity, with AI Security ranked as the highest spending priority, followed by Cloud-Native Application Protection Platforms (CNAPP) and Endpoint Security.
Wells Fargo also points out that relational databases will continue to dominate IT spending, with 46% of CIOs planning to increase their investment in this area.
Despite significant allocation toward GenAI, the bank notes that most CIOs do not plan to deploy vector databases in 2025.
Overall, for the software sector, Wells Fargo explains that cybersecurity has historically always been a top priority within an overall IT budget, although the spending priorities within cybersecurity typically change year-to-year “and 2025 is no different.”