Shares of Fastly surged 6.5% Friday morning after Oppenheimer analyst Param Singh upgraded the stock from Perform to Outperform and set a $35 price target — implying roughly 30% upside from Thursday's close of $25.29. Singh cited proprietary industry checks showing accelerating contract values and early-stage earning of revenue from agentic AI traffic — automated requests made by AI assistants and software agents rather than humans. The call puts a spotlight on whether Fastly's growth surge is durable enough to justify a stock that is, by some measures, already expensive.
• AI Bots Are Flooding the Internet — and Fastly Sits at the Tollbooth
From January through May 2026, AI requests on Fastly's platform grew approximately 30%, roughly 6.5 times faster than human traffic.
Autonomous machine-to-machine traffic is now approaching half of all internet requests. That volume creates natural demand for Fastly's content-delivery and security services, because every AI bot that scrapes a website or fetches data in real time needs the same infrastructure a human visitor does — often more. Oppenheimer says this agentic traffic accelerated in Q3, driving higher network usage and greater uptake of Fastly's bot-management tools.
• Security Products Are the Real Revenue Engine
Q2 revenue rose 23% year-over-year to a record $183.3 million, with gross margin hitting 63.3%.
Security revenues jumped 43% to $41.7 million, now representing 23% of total revenue, up from 20% a year earlier.
Singh's checks show average deal sizes grew in Q3, driven by cross-selling of newly launched AI-focused security tools that went live in September and haven't yet meaningfully hit the top line. That leaves a revenue ramp still ahead — but still unproven.
• The Growth Math vs. the Valuation Math
Oppenheimer projects revenue growth in the "high teens to low twenties" for the next several years — a meaningful step up from Fastly's prior three-year revenue growth rate of just 6.1%.
Management raised full-year 2026 guidance to $732–$746 million in revenue. Yet Fastly's price-to-sales ratio stands at 5.61x, well above its historical median of 4.67x , and the company still reports negative GAAP earnings. Investors are paying a premium for a profit that hasn't fully arrived.
• Insiders Are Selling Into Strength
No insiders purchased shares in the past year, while insiders sold $88.8 million worth of stock. Those sales were largely pre-scheduled, but the imbalance is worth noting when a bullish analyst tells outsiders to buy at prices insiders have been steadily exiting.