Fastly (FSLY) wowed the market on Thursday with a staggering 72% surge in its stock price, following the release of its record-breaking fourth-quarter earnings. This explosive gain underscores the market’s enthusiasm for the edge cloud platform provider, which has been quietly positioning itself at the intersection of content delivery and emerging technologies.
The earnings report highlighted Fastly’s robust performance amid a challenging economic landscape, signaling a potential turnaround for the company that has long been viewed as an underdog in the tech sector. As artificial intelligence continues to evolve, Fastly’s infrastructure is increasingly seen as essential for delivering fast, secure experiences.
This momentum has investors rethinking whether FSLY is the overlooked gem in the AI ecosystem, ready to deliver substantial returns.
Record-Breaking Results
Fastly’s Q4 results were impressive, with revenue reaching $172.6 million, a 23% increase year-over-year. This growth was driven by strong demand in both its core network services, up 19% to $130.8 million, and security offerings, which surged 32% to $35.4 million. The company achieved a record gross margin of 61.4% on a GAAP basis and 64% non-GAAP, reflecting improved operational efficiency and cost management. For the full year 2025, revenue totaled $624 million, up 15% from 2024, marking a significant acceleration in the latter half of the year.
Importantly, 2025 represented Fastly’s first profitable year ever on a non-GAAP basis, with the company swinging to positive adjusted earnings per share in the fourth quarter at $0.12, compared to a loss in the prior year.
This milestone highlights the success of Fastly’s strategic initiatives, including expansions in its customer base and product innovations. With over 600 enterprise customers and a net retention rate of 110%, the business is demonstrating resilience and scalability. Looking ahead, guidance for Q1 2026 projects revenue between $168 million and $174 million, with full-year expectations of $700 million to $720 million, suggesting continued momentum.
Powering the AI Future
As AI transitions into a more agentic phase – where autonomous agents interact dynamically with users and systems – Fastly’s content delivery network (CDN) plays a pivotal role in speeding up and protecting websites and applications. By distributing content across a global network of servers, Fastly ensures rapid data delivery, minimizing delays that can hinder AI-driven experiences like real-time chatbots or personalized recommendations.
At the heart of this is Fastly’s edge computing platform, which reduces latency by placing data and application logic closer to end users. This proximity enables faster processing and decision-making, crucial for agentic AI that requires instantaneous responses. This capability not only enhances performance but also safeguards against malicious activities, positioning Fastly as a guardian of the AI ecosystem. With AI traffic contributing to revenue growth, Fastly is well-equipped to capitalize on the expanding demand for edge-enabled solutions.
Bottom Line
Following Thursday’s 72% gain, Fastly’s stock is now up 57% year-to-date and a remarkable 244% from its 52-week low. This rally reflects growing confidence in the company’s trajectory. Wall Street analysts forecast 51% annual EPS growth over the next five years, and at current levels, FSLY trades at an attractive PEG ratio of 0.86, balancing its valuation with this robust growth potential.
As a hidden AI stock leveraging edge computing for the agentic era, Fastly deserves a spot on every investor’s radar.
— Rich Duprey
$3 billion+ in operating income. Market cap under $8 billion. 15% revenue growth. 20% dividend growth. No other American stock but ONE can meet these criteria... here's why Donald Trump publicly backed it on Truth Social. See His Breakdown of the Seven Stocks You Should Own Here.
Source: Money Morning