Gone with the wind. Cloudflare’s backers are in a sunny mood. The $34 billion cybersecurity firm saw its shares surge 24% on Feb. 8 after it reported better-than-expected quarterly results. Boss Matthew Prince wants to step from providing a security filter for the internet to crunching the numbers every time someone queries an artificial intelligence model like ChatGPT. That’s a chance to grab a piece of a huge market being driven by technology giants like Microsoft; but meager profit and the difficulty of keeping up with behemoths’ spending makes its deluxe valuation look premature.

After last week’s bump, Cloudflare is valued at roughly 23 times next year’s sales, according to projections from Jefferies' analysts, who say this makes it the most expensive software company they cover. Those sales are growing rapidly: On average, revenue rose by 46% annually since Cloudflare went public in 2019.

Yet similarly sized security rival Zscaler is expanding about as quickly and trades around 15 times, according to LSEG. The main difference is, while Zscaler and other peers like Palo Alto Networks rely on third-party servers and data centers, Cloudflare runs its own. That means it can offer its capacity to others; rather than a user in London fetching data all the way from New York, a local facility can store information and send it more quickly.

That’s helping Cloudflare join the artificial intelligence hype train. Asking an AI to do something generally requires calling on a data center’s computing grunt. Cloudflare reckons it can speed up the shifting of bits back and forth.

But AI is tremendously expensive. Look at $3 trillion Microsoft, which provides its immense computing power to OpenAI. Last quarter alone it reported $11.5 billion in capital expenditures, up 69% year-over-year. Microsoft and its gigantic peers are more diversified than Cloudflare and generate billions in cash. Cloudflare lost $28 million last quarter.

Prince says that spending on Cloudflare’s network will jump from 8% of revenue last quarter to maybe 12% for 2024. While a lot for the company, that amounts to all of $200 million, judging by LSEG estimates. Traffic from AI may well explode, leaving plenty of work for even smaller firms to handle. But the still-nascent, costly line of business could take years to make a material difference to Cloudflare’s top line, let alone yield profit. Finding a way to extract value from the chatbot mania is smart, in theory. But Microsoft and others may just gobble it up for themselves.