Edge-cloud platform stocks like Fastly (FSLY) experienced a massive drop after popular AI company Anthropic announced its Claude Managed Agents. The company’s stock dropped 21.7% intraday on Apr. 10 on the news, after a 10.1% drop on Apr. 9. It must be mentioned that the stock has surged robustly over the past year before this dip.
The optimism surrounding the U.S.-Iran ceasefire that lifted the market dipped when Anthropic announced its advanced AI model, Mythos, with an exclusive Project Glasswing last week, thereby adding pressure on software names.
Mythos’s ability to autonomously identify and exploit software vulnerabilities has raised questions about Fastly’s edge security model, as AI tools can now bypass traditional safeguards. In addition, Claude Managed Agents are seen as a direct infrastructure competitor to Fastly’s platform.
However, AI might not be as big a threat as investors are anticipating. Given this situation, should you consider capitalizing on Fastly’s dip?
About Fastly Stock
Fastly is a cloud infrastructure company that operates a global edge platform designed to help businesses deliver digital experiences faster, more securely, and closer to end users. Fastly’s core business is built on a programmable network that caches and routes content through distributed points of presence worldwide, reducing latency and improving performance. And, the company offers security products, including web application firewalls, DDoS protection, bot mitigation, and API security, all integrated into a single platform.
Fastly’s operations are tied to usage on its network, so customers pay for the traffic, security coverage, and compute resources they consume. Headquartered in San Francisco, California, it has a market capitalization of $3.50 billion.
The company’s stock has skyrocketed over the past year due to strong financial performance and high revenue visibility. Furthermore, Fastly appears to be benefiting from strategic initiatives and expanding market presence in the edge cloud and security space. Over the past 52 weeks, the stock has gained a whopping 344.71%, while it is up 139.39% year-to-date (YTD). The shares reached a 52-week high of $34.82 on Apr. 8, but are down 30% from that level.
Fastly’s stock has been trading above its 50-day moving average since mid-February. However, its 14-day RSI of 46.30 indicates slightly bearish momentum. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 96.92 times is considerably higher than the industry average of 21.64 times.
Fastly Q4 Earnings Lift Optimism on Revenue Growth and Margin Progress
For the fourth quarter of fiscal 2025, Fastly reported record results, which lifted investor sentiment. The company’s revenue increased 22.8% year-over-year (YOY) to a record $172.61 million, exceeding the $161.40 million that Wall Street analysts had expected.
Its non-GAAP gross margin grew from 57.5% in Q4 2024 to 64% in Q4 2025. Also, the company reported quarterly non-GAAP operating income of $21.23 million, a significant turnaround from an operating loss in the prior-year period. Fastly reported non-GAAP EPS of $0.12, beating the $0.06 Street analysts had expected. There’s greater visibility into its revenue, with a $354 million remaining performance obligation (RPO), up 55% from $228 million in Q4 2024.
Wall Street analysts have a positive view about Fastly’s bottom line trajectory. For the first quarter (to be reported on May 6, after the market closes), its loss per share is expected to decline by 52.2% YOY to $0.11. For fiscal 2026, the company’s loss per share is projected to decrease by 29.9% annually to $0.47, followed by a 21.3% improvement to a $0.37 loss per share in fiscal 2027.
What Do Analysts Think About Fastly’s Stock?
Recently, Wall Street analysts have overwhelmingly reaffirmed their neutral stance on Fastly’s stock. This month, experts at Piper Sandler kept a “Neutral” rating on the stock but raised the price target from $14 to $30. This was done after a reassessment of the stock, which left analysts incrementally more positive but not enough to turn the rating positive.
In March, RBC Capital analysts raised the price target from $12 to $20, while keeping a “Sector Perform” rating and noting the company’s improved execution and potential expansion.
Citigroup analyst Fatima Boolani maintained a “Neutral” rating on Fastly’s stock but raised the price target from $10 to $13 in February, which is essentially in line with other analysts.
Fastly is still a sound favorite on Wall Street, with analysts awarding it a consensus “Moderate Buy” rating. Of the 11 analysts rating the stock, three analysts have rated it a “Strong Buy,” while seven analysts are playing it safe with a “Hold” rating, and one analyst rated it “Moderate Sell.” The consensus price target of $16 represents a 34.4% downside from current levels. However, the Street-high price target of $30 indicates a 23% upside.
Key Takeaways
Fastly's growth trajectory has been laudable. However, the stock has been volatile. With analysts recently taking a neutral stance, especially amid the AI threat, it might be wise to monitor the stock for potential upside triggers before getting into it.
On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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