Key Stats for Fastly Stock
- Monday Performance: 21%
- 2-Week Range: $7 to $35
- Valuation Model Target Price: $27
- Implied Downside: 3%
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What Happened?
Fastly Inc. stock surged about 21% on Monday, finishing near $28 per share as investors reacted to stronger second-quarter results, a raised 2026 outlook, and fresh management commentary at the KeyBanc Technology Leadership Forum. The move strengthened the market’s view that Fastly may be evolving from a traditional content-delivery provider into a broader security and edge-computing platform with faster growth and improving profitability.
Fastly stock jumped because its Q2 results showed faster growth, record margins, and a stronger 2026 profit outlook. Revenue reached a record $183.3 million, up 23% year over year, while Security revenue increased 43% to $41.7 million and other revenue, which includes Compute and Observability products, rose 69% to $7.7 million. Non-GAAP gross margin reached a record 65.8%, while Fastly raised full-year revenue guidance to $732 million to $746 million and non-GAAP operating income guidance to $88 million to $96 million, reinforcing that higher growth is increasingly translating into profit.
This week at the KeyBanc Technology Leadership Forum, management reinforced that momentum, highlighting 23.3% year-over-year revenue growth, $27 million of operating profit, four consecutive quarters of operating profit, and six straight quarters of positive free cash flow. CFO Richard Wong said “execution is beginning to match the product quality,” while trailing 12-month net retention reached 117% and RPO grew 38%, showing that existing customers are spending more while larger commitments improve revenue visibility. Management also highlighted opportunities in bot management, where Fastly can help customers distinguish useful AI agents from unwanted automated traffic, while its edge-compute strategy allows the company to participate in AI demand without making large investments in GPU infrastructure.
Wall Street also became more constructive after the quarter. KeyBanc raised its Fastly price target from $27 to $30 and maintained Overweight, Piper Sandler raised its target from $27 to $28 while keeping Neutral, and RBC Capital lifted its target from $22 to $28 while maintaining Sector Perform. Fastly’s 23% revenue growth remains below Cloudflare’s 36% Q2 growth but above Akamai’s 5%, showing that Fastly’s turnaround is gaining traction even though Cloudflare remains the stronger growth benchmark. Continued security cross-selling, new-customer wins, and greater Compute adoption will help determine whether Fastly can sustain that momentum through the rest of 2026.
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Is Fastly Fairly Valued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): around 14%
- Operating Margins: around 13%
- Exit P/E Multiple: around 45x
Fastly’s 14% revenue-growth assumption depends on Security and Compute becoming larger contributors alongside content delivery, with security cross-selling and growing AI-related traffic giving customers more reasons to spend across the platform.
The 117% net retention rate and 38% RPO growth support that outlook because existing customers are expanding spending while larger commitments provide better visibility into future revenue.
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Reaching a 13% operating margin requires continued operating leverage, and the EBIT chart supports that direction by showing a shift from historical losses toward positive profits as Fastly scales its shared delivery, security, and compute infrastructure.
The 45x exit P/E remains a premium assumption, so the valuation requires Fastly to sustain profitable double-digit growth and margin expansion rather than relying on further multiple expansion.
At around $28 per share, TIKR’s valuation model estimates Fastly’s value at about $27, implying roughly 3% downside over about 2.5 years, leaving the stock fairly valued after its rally with stronger returns dependent on sustained Security and Compute growth, broader customer adoption, and continued profitability gains.
How Much Upside Does FSLY 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.
