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Cloudflare and HubSpot both beat on Q1 earnings — but with AI threats looming, it wasn't enough to satisfy investors

Traders continue to "sell software now, ask questions later."

HubSpot and Cloudflare, two enterprise software companies that do completely different things — one a marketing and CRM firm, the other a cybersecurity play — are under pressure for the exact same reason this morning.

While both beat on headline earnings in Q1, both failed to successfully dispel the notion that AI was a threat to their future growth, margins, or very existence, with Cloudflare falling more than 15% in early trading Friday and HubSpot faring even worse, down 20% at the time of writing.

For Cloudflare, in Q1 2026, the company reported:

Revenue of $640 million, 2.7% ahead of consensus estimates.
Adjusted earnings per share of $0.25, 7.5% ahead of consensus.

For Hubspot, in the first three months of its fiscal year, it managed:

Revenue of $881 million, 2% north of Wall Street estimates.
Adjusted earnings per share of $2.72, a 10% beat vs. consensus.

Strong results aside, as I noted two weeks ago:

Whether you make dashboards, CRMs, design tools, or run an HR platform, if it’s built on code, the market thinks there’s a decent chance that at least one of the four C’s — Claude, Codex, Copilot, or Cursor — is going to blow a hole in your business model. Or, to be more accurate: someone using one of those coding tools will.

So, any hint of AI weakness in your quarterly earnings is jumped on by the market as evidence that your future is under threat.

For Cloudflare, the company's Q2 forecast, coupled with a massive restructuring, seems to be its undoing, with revenue for the quarter projected as around $664.5 million — that's a hair under the consensus estimate of $666 million. At the same time, the company announced a huge set of layoffs, cutting about 1,100 jobs, or some 20% of its workforce, as the company moves to adopt AI agents and tools.

Ironically, other firms announcing a slimmed-down workforce because of AI have seen their share prices pop. However, when people think AI is going to kill your business, it seems markets won’t give you the same treatment for jumping into bed with it.

For HubSpot, it was a similar story: a Q2 revenue forecast of $897.5 million at the midpoint is about $2 million and change below consensus estimates, per Bloomberg. That's not a lot, but even a gentle flattening of its growth trajectory seems to be enough to drive downgrades from Wall Street analysts; analysts at Cantor Fitzgerald and William Blair both downgraded the stock to "Neutral / Market Perform" from "Overweight / Outperform," while JPMorgan cut its price target to $250 from $325.

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South Korea surges past Canada to become the seventh-largest stock market in the world amidst AI boom

The country’s two chip giants have seen their shares more than double this year.

Hyunsoo Rim29m

Hyunsoo Rim2h

Akamai Technologies jumps on $1.8 billion cloud infrastructure deal

Akamai is up 26% in premarket trading Friday after the company announced a major cloud infrastructure deal tied to AI, helping investors look past modestly better-than-expected Q1 results and a weaker-than-expected Q2 outlook.

In a press release Thursday after the bell, the cloud and cybersecurity company said it had secured a $1.8 billion, seven-year commitment from a “leading frontier model provider” for Akamai’s cloud infrastructure services, a deal CEO Tom Leighton said strengthened the company’s position as a “key infrastructure provider in the AI economy.”

The announcement came alongside Akamai’s Q1 earnings, which were only modestly ahead of Wall Street expectations. Adjusted earnings came in at $1.61 per share, slightly above analysts’ estimate of $1.60 per share compiled by FactSet. Revenue rose 6% year on year to $1.074 billion, broadly in-line with Wall Street's forecasts.

The company said growth was led by its cloud infrastructure services, where revenue jumped 40% year on year. Security revenue grew 11%, while delivery and other cloud applications revenue dropped 7%.

For the current quarter, the company forecast adjusted earnings per share of $1.45 to $1.65, with the midpoint falling short of the $1.68 expected, and revenue of $1.075 billion to $1.1 billion also below the $1.104 billion estimate at the midpoint, according to FactSet.

Luke Kawa14h

Nvidia to invest up to $2.1 billion in IREN in partnership that deploys as much as 5 gigawatts of its AI infrastructure

Another day, another massive Nvidia warrants deal in the AI ecosystem.

Shares of data center company IREN spiked 20% in postmarket trading after it reached a pact with the chip designer to deploy up to 5 gigawatts of its AI offerings across data centers.

This means that IREN will effectively be building out data centers designed by Nvidia to optimize for its hardware. And some of that hardware deployed will seemingly then be utilized by Nvidia: IREN also announced a $3.4 billion AI cloud contract with the giant on Thursday.

As part of the arrangement, IREN issued Nvidia warrants that expire in five years that enable the company to buy up to 30 million shares at $70 apiece. If fully exercised, that would amount to a $2.1 billion investment into IREN.

This announcement took the sting out of IREN’s Q3 results, which saw the firm report sales of $144.8 million (compared to analyst estimates of $216.6 million) and adjusted EBITDA of $59.5 million (estimate: $125 million).

On Wednesday, Nvidia announced an investment of $500 million in fiber-optics firm Corning to accelerate its manufacturing capacity.

Paige Oamek15h

Applied Optoelectronics sinks after Q1 sales miss, underwhelming Q2 revenue guidance

Applied Optoelectronics tumbled after-hours after the connectivity company reported lower-than-expected Q1 sales and underwhelming revenue guidance.

Here are the numbers:

Revenue of $151.1 million (compared to analyst estimates of $157.5 million).
An adjusted loss per share of $0.07 (estimate: a $0.05 loss).
An adjusted gross margin of 29.1% (estimate: 30.37%).

The company helps servers in large-scale data centers relay information, partnering with companies like Microsoft and Amazon. Last month, the stock surged after news broke that a key hyperscale customer, following an initial order, had significantly increased its demand for AAOI’s offerings.

For second quarter of 2026, the company expects:

Revenue in the range of $180 million to $198 million (estimate: $196.83 million).
Adjusted gross margin in the range of 29% to 30% (estimate: 31.42%).

In the press release, AAOI Chief Financial and Strategy Officer Dr. Stefan Murry said:

“Our focus remains on ramping our capacity thoughtfully to meet the unprecedented demand and are confident in our ability to execute on our ambitious growth plans, while ensuring reliability, quality, and a dedication to excellence.”

Demand for photonics does not seem to be in question, but judging by Lumentum’s post-earnings call on Tuesday and Applied Optoelectronics’ commentary, the challenge lies in securing supply.

AAOI was up nearly 300% since the beginning of the year before this print.

Paige Oamek15h

Airbnb beats on Q1 revenue, increases guidance for current quarter

Shares of Airbnb whipsawed in after-hours trading Thursday after the company beat Wall Street estimates on revenue and raised guidance for the year, but missed on earnings per share, citing “macroeconomic and geopolitical uncertainty.”

Airbnb reported:

Q1 revenue of $2.7 billion (compared to analyst estimates of $2.6 billion).
Adjusted EBITDA of $519 million (estimate: $483.2 million).
Adjusted diluted EPS of $0.26 (estimate: $0.29).
Q2 revenue sales guidance of $3.54 billion to $3.60 billion, representing year-over-year growth of 14% to 16% (estimate: $3.4 billion).

Investors were watching for initial impacts of the Iran war, gas prices, jet fuel costs, and cost-of-living increases on the company’s finances and projections.

Despite the difficult terrain, the company said that it’s confident going forward. For 2026, Airbnb raised its guidance, stating that it expects year-over-year revenue growth to accelerate to low to mid-teens and an adjusted EBITDA margin of at least 35%.

“The upward revision to our revenue outlook reflects meaningful progress across our growth initiatives and improvements to monetization through a simplified fee structure and our insurance programs, which are expected to lift our full-year take rate. We remain optimistic about our continued momentum, even as we face tougher comparisons in the back half of this year against the rollout of Reserve Now, Pay Later in 2025 and current headwinds from the Middle East conflict.”

Perhaps Wall Street is less certain about customers’ willingness to splurge on vacations given the state of things. According to the company, in Q1, roughly 20% of global booking value came from Reserve Now, Pay Later bookings.