Fastly Might Double Again From Here
The first phase of AI focused on building large models. We now enter the distribution phase. Cost represents a major concern for developers. $FSLY Fastly provides a critical optimization layer. Enterprises use Fastly to balance high performance with expensive API costs. The Fastly AI Accelerator utilizes semantic caching. This technology recognizes the underlying intent of a prompt. It serves responses from the edge rapidly. This process reduces redundant token expenditures significantly. Fastly creates synthetic capacity for compute constrained AI labs. Every deflected token gives model providers more throughput for high value reasoning. The dropping cost of AI inference triggers the Jevons Paradox. Total computing demand explodes as costs fall. Autonomous agents require local programmable reflexes. Fastly allows these agents to run logic directly at the network edge.
Fastly is experiencing massive growth in Remaining Performance Obligations. The company reported a 55% YoY increase in its RPO balance during the fourth quarter. Customers are signing longer deals. Existing clients are adopting multiple product lines. The Compute segment houses the new AI accelerator business. This high margin segment grew 75% YoY in Q4 2025. These catalysts support a massive revenue beat for 2026.
I project first quarter revenue will hit $180m - $186m. 2nd quarter revenue could reach $200 - $203m. 3rd quarter revenue could climb to $210m - $216m. 4th quarter revenue should finish the year at $220m - $224m.
This progression yields a full year 2026 revenue projection of $810m - $830m. Management guided for only $720 million at the high end. They are setting an extremely conservative bar. The higher revenue scale also creates strong operating leverage. I forecast over $100 million in operating income for 2026. This would double the guidance provided by management. Fastly grew its remaining performance obligations by 55% to $354m and Enterprise clients drove a 75% expansion in the high margin Compute segment to deploy new edge artificial intelligence tools. The top ten Enterprise accounts increased their spending by 28% YoY. This aggressive platform adoption expanded the net retention rate (NRR) from 106% to 110% sequentially, which, helps support the $810m - $830m target. For a reality check, if Fastly has 0 net new Enterprise clients and achieves the same 110% NRR in 2026, they would achieve $765M in total revenue.
The market currently misprices this AI infrastructure play. Cloudflare holds a $78 billion market capitalization. Cloudflare projects $2.8 billion in forward sales for 2026, implying the same 33% YoY growth I am modeling for Fastly. This gives Cloudflare a premium forward price to sales multiple of 28x. Fastly trades at a massive discount, at 5.3x P/S according to my modeling.
My model projects $810m - $830m in forward sales for Fastly. The stock is currently experiencing a violent re-rating and has yet to sniff the Cloudflare multiple. At a revenue base of almost ⅓ of Cloudflare, it is fair to be skeptical the stock will not see a 28x multiple.
Here are the scenarios at a 10x, 15x, and 20x multiple though:
Fastly reaches $55, $82, and $110 respectively
Fastly will reward investors handsomely as the market is recognizing its vital role in the new agentic economy.