Insiders are selling AI enablers such as Penguin Solutions (NASDAQ: PENG) and Cloudflare (NYSE: NET), but investors should think twice before doing so. AI is more than a one-company, one-system, or one-ecosystem solution; it is a global network of data, computing power, memory storage, and inference outputs that has yet to be fully realized.

While insiders sell these stocks, they have reasons average investors don’t, including outside exposure to market risks, given the recent share price upswings. In this scenario, Penguin Solutions and Cloudflare insiders can be excused for their sales; investors should think twice because market positioning and long-term outlooks suggest sustainable growth, profitability, and value gains lie ahead.

Penguin Solutions Connects the AI Dots

Penguin Solutions' AI pivot is a game-changer for the business, establishing it as the AI enabler for enterprises globally. The company’s benefit to the enterprise is nuts-and-bolts expertise, proprietary hardware and software for building, setting up, and operating data centers. Its Integrated Memory Solutions segment is in high demand because it enables massive GPU clusters to pool memory and efficiently use resources for training and inference. Today’s driver is datacenter buildout, but the long-term driver is inference, which translates into datacenter maintenance and servicing revenue for Penguin.

Insiders selling PENG include numerous directors and senior vice presidents; reasons to believe the selling is innocuous include the timing, which aligns with PENG’s stock price ramp and run to long-term highs, total holdings, which remain ample at nearly 3% of the stock, and the sell-side interest, including analysts and institutions.

---

---

Analysts responded vigorously to Penguin’s Q2 earnings report, with numerous price target increases posted since the release. The group pegs the stock at Moderate Buy with a bullish bias and sees it advancing this year. As it stands, the high end aligns with early July highs and may limit near-term upside.

This year’s catalysts include being named an NVIDIA (NASDAQ: NVDA) AI Factory Specialized Partner. The invitation-only designation places it among an elite few organizations capable of constructing and operating hyperscale-quality AI factories with full original equipment manufacturer (OEM) backing. This will help accelerate client wins, as data center construction is shifting toward more localized, enterprise, and government-sponsored clouds. Who better to help build and operate a cloud than Penguin?

Cloudflare Is at the Nexus of a Major Monetization Shift

Cloudflare is well-positioned for today’s Internet, the rise of AI training, and the age of inference. Today’s drivers include its significance as a first line of cybersecurity defense, rising agentic bot traffic and demand for its distributed network and vibe-coding tools. However, the inference age is the most important because it's driving changes in Internet traffic and monetization that Cloudflare is uniquely poised to tap.

AI is already stepping in between web publishers and the traffic they monetize. When a consumer searches using AI and the AI bot spits out a summary, it has crawled dozens of websites the consumer will never see, much less click on. If the AI bot somehow monetizes the information, it's taken revenue from the publisher. Cloudflare’s Monetization Gateway will put an end to all that. It enables websites to block bot traffic, forcing them to pay for the information they crawl.

Insiders selling Cloudflare include the CEO, directors, and various C–suite executives. Reasons to believe the selling is nothing to worry about include the insider history, which includes periods of selling, the timing, which aligns with share price spikes, and market dynamics, which suggest the stock is being accumulated by individuals and organizations.

Analysts, who’ve collectively raised price targets since the Q2 earnings report, rate the stock a Moderate Buy with a bullish bias and see it moving higher by year’s end. The only negative in the data is that the consensus price target lags price action, but the trend matters, with a high of $315 forecasting fresh all-time highs. Institutional activity is subdued compared to prior years but bullish on balance, with them accumulating at approximately $2 to $1 in the first half of 2026.

Cloudflare’s primary catalyst is the shift to an AI-first operating model. The shift enabled a significant headcount reduction, improved efficiency, and a new slate of tools resonating with users. The Cloudflare One Design Partner Designation is part of the shift, enabling clients to easily deploy secure AI solutions.

Cloudflare's risks include its high valuation, execution risk, and competition. The stock trades at persistently high valuations, reflecting its importance to global web traffic, making it more susceptible to execution risks. Regarding execution, its position within the global Internet ecosystem means that missteps will have wide-ranging ramifications, impacting the stock price and the broader market.

Companies in This Article:

Company	Current Price	Price Change	Dividend Yield	P/E Ratio	Consensus Rating	Consensus Price Target
Penguin Solutions (PENG)	$74.54	-3.5%	N/A	54.32	Moderate Buy	$57.71
Cloudflare (NET)	$272.85	+1.2%	N/A	-1,074.18	Moderate Buy	$249.81