Key Stats for Fastly Stock
- Today’s Performance: -8%
- 52-Week Range: $8 to $35
- Valuation Model Target Price: Around $28
- Street Analyst Target Price: Around $28
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What Happened?
Fastly stock (NASDAQ: FSLY) is trying to prove that its transformation from a traditional content-delivery network into a broader security, compute, and AI-edge platform can turn rapidly growing machine traffic into profitable growth. That debate intensified today as Fastly stock fell about 8%, giving back part of its recent rally as expectations rise for the company to prove that stronger demand can translate into sustained earnings growth.
Fastly stock fell today as investors reassessed its sharp rally and whether the company can deliver enough growth and profitability to support its higher valuation. At its September 22 Investor Day, Fastly targeted $1.1 billion to $1.3 billion in revenue by 2029, representing a 14% to 21% CAGR from 2026, alongside non-GAAP operating margins of 20% to 22% and free cash flow margins of 12% to 15%. Those targets point to substantial long-term improvement, but they also raise the bar for Fastly to prove that security, compute, and AI adoption can translate into sustained revenue growth and stronger profitability.
The operating momentum behind that strategy was already visible at the September 15 Piper Sandler Growth Frontiers Conference, where Fastly CFO Richard Wong highlighted $183 million in quarterly revenue, up 23% year over year, with delivery services growing 17% and security revenue jumping 43%. Remaining performance obligations increased 38%, while the portion expected to convert into revenue within the next year rose 44%, and Fastly reached a four-year-high 117% net retention rate, meaning existing customers collectively increased their spending. Wong also highlighted the operating leverage emerging as Fastly scales, saying, “The gross margin flow-through on incremental revenue is 96%.”
Competition raises the bar as Fastly expands beyond content delivery into markets served by Cloudflare and Akamai, two major rivals across edge networking, security, and cloud infrastructure. Akamai generated $2.2 billion in security revenue in 2025, up 10% for the full year, while its Cloud Infrastructure Services revenue grew 36% to $314 million, compared with Fastly’s 43% year-over-year security growth in its latest reported quarter. The different reporting periods make this an imperfect comparison, but the figures show the scale and growth Fastly faces as it pushes deeper into security and cloud infrastructure.
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Is Fastly Fairly Valued?
Consensus estimates point to a significant profitability inflection for Fastly. TIKR estimates show EBIT rising from around $90 million in 2026 to nearly $300 million by 2030, while EBIT margins expand from around 13% to 23%. That would mark a major shift from negative EBIT in 2024 and depends on Fastly turning security, compute, and AI-related demand into sustained operating leverage.
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): around 16%
- Operating Margins: around 13%
- Exit P/E Multiple: around 44x
The model’s 16% revenue CAGR depends increasingly on Fastly selling more than traditional content delivery. Security provides one of the clearest growth levers, with revenue in that business rising 43% year over year in the latest reported quarter, while compute gives Fastly another way to monetize workloads running through its edge network. Fastly’s 117% net retention rate also shows that existing customers are expanding their spending, creating an opportunity to grow by cross-selling more security and compute products to customers already using its platform.
Margin expansion could become just as important as revenue growth. Fastly can run delivery, security, and compute workloads across the same network, allowing additional revenue to make better use of infrastructure already in place. Wong explained the operating leverage directly, saying, “The gross margin flow-through on incremental revenue is 96%.” That suggests higher network utilization can translate into meaningful profitability gains as Fastly scales.
The consensus margin trajectory also provides useful context for the valuation model. Its 13% operating-margin assumption sits below the roughly 20% or higher margins analysts expect later in the decade, so the model does not depend on Fastly reaching the full longer-term profitability trajectory shown in the chart. However, the 44x exit P/E multiple is demanding. Fastly would need to establish itself as a consistently profitable growth company for that multiple to remain reasonable, leaving less room for execution problems if growth or margin expansion falls short.
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Based on these assumptions, TIKR’s valuation model estimates Fastly stock could be worth around $28 per share. With shares trading around that level after the recent volatility, the model points to limited valuation upside rather than a large margin of safety. Fastly therefore looks fairly valued under these assumptions, with stronger returns increasingly requiring the company to outperform the model’s growth or profitability expectations.
Over the next 12 months, Fastly’s results could hinge on whether rising AI and machine-generated traffic translates into higher customer spending across security and compute. Cross-selling provides another meaningful growth lever, while management reported triple-digit growth in Bot Management and DDoS Protection, products that help customers identify malicious automated traffic and protect websites and applications from attacks.
Greater network utilization could then turn that growth into stronger margins because Fastly can sell additional services over infrastructure it already operates. Progress toward the profitability trajectory shown in consensus estimates would provide evidence that Fastly’s shift toward security, compute, and higher network utilization is improving the economics of the business.
At current levels, Fastly appears fairly valued, with further upside increasingly dependent on turning AI-driven traffic, security cross-selling, and compute adoption into sustained revenue growth, higher margins, and stronger free cash flow.
How Much Upside Does Fastly Stock Have From Here?
Investors can estimate Fastly’s potential share price, or what any stock could be worth, in under a minute using TIKR’s New Valuation Model tool.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E Multiple
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
