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Cloudflare is cutting more than 1,100 jobs worldwide in a sweeping AI-driven restructuring that rattled investors and sent the company’s stock plunging nearly 19% in extended trading, even after reporting stronger-than-expected quarterly results.

The dramatic move underscores the growing impact of artificial intelligence on the global workforce as major tech companies race to redesign operations around automation, efficiency, and what executives are calling the next era of AI-powered business.

The internet infrastructure and cybersecurity company said Thursday it would cut about 20% of its workforce as it restructures operations around the rapid adoption of artificial intelligence tools. The company also issued a second-quarter revenue forecast that came in slightly below Wall Street expectations, adding to investor anxiety.

Cloudflare said it plans to eliminate more than 1,100 jobs globally. The company had 5,156 full-time employees at the end of 2025 and expects charges between $140 million and $150 million tied to the layoffs during the second quarter.

Investors reacted swiftly.

Despite posting better-than-expected first-quarter earnings, shares of the San Francisco-based company dropped roughly 19% after the announcement, highlighting growing concerns about slowing growth and the disruptive consequences of AI-driven restructuring across corporate America.

AI Transformation Reshapes Cloudflare’s Operations

Cloudflare expects second-quarter revenue of $664 million to $665 million, narrowly missing analysts' estimate of $665.3 million, according to LSEG-compiled data. Adjusted earnings are projected at 27 cents per share, matching Wall Street expectations.

The company’s leadership framed the cuts not as a reaction to weak performance, but as part of a much larger transformation.

Cloudflare CEO Matthew Prince and co-founder Michelle Zatlyn said in a message to employees that the company was “reimagining every team and function” to operate in what they described as an “agentic AI-first operating model.”

The company emphasized that the layoffs were tied to a redesign of internal processes and roles rather than employee performance or short-term financial pressure.

Cloudflare also revealed that its internal use of AI has surged more than sixfold over the past three months, triggering major operational changes across teams.

That rapid adoption is becoming a defining trend across Silicon Valley as companies aggressively integrate AI into daily workflows to boost productivity and reduce reliance on traditional staffing models.

Strong Earnings Could Not Calm Investor Fears

Cloudflare’s financial results beat expectations across the board.

In the first quarter, the company reported revenue of $639.8 million, topping analysts’ estimate of $621.9 million. Adjusted profit came in at 25 cents per share, ahead of expectations of 23 cents per share.

Even with Thursday’s sharp selloff, Cloudflare shares remain up 30.3% so far this year.

Still, investors appeared more focused on the long-term implications of slowing growth forecasts and the accelerating wave of AI automation reshaping the tech sector.

AI Job Cuts Spread Across Corporate America

Cloudflare’s announcement lands amid intensifying fears among economists and investors that artificial intelligence could trigger widespread job losses in industries most vulnerable to automation.

The company is far from alone.

In a similar move, payments firm Block said in February that it would cut more than 4,000 jobs, nearly half its workforce, as part of an overhaul designed to embed AI across its operations.

Earlier this year, Goldman Sachs economists estimated that AI was responsible for 5,000 to 10,000 monthly net job losses in 2025 across the most exposed U.S. industries.

Those warnings are now becoming reality as companies move from experimenting with AI tools to fundamentally rebuilding how they operate.

For workers across the tech industry and beyond, Cloudflare’s massive workforce reduction may signal a turning point in how aggressively corporations plan to use artificial intelligence to replace, redesign, and streamline human labor.