Cloudflare's Q1 2026 results were unambiguously strong by the metrics that normally define a successful quarter — revenue beat, earnings beat, internal AI usage described by the company as having jumped dramatically. The 24-percent stock decline that followed is not adequately explained by the layoffs alone. Companies cut workforces in good quarters without losing a quarter of their market capitalization. What investors appear to have priced was the candor: CEO Matthew Prince said directly that AI made 1,100 roles obsolete [1], and the market treated that admission as a confession…