Up 140% in the Last 12 Months, Can Fastly Stock Keep Climbing in 2026?

Key Takeaways:

• Security Surge: Fastly’s security revenue jumped 47% year-over-year and now makes up 22% of total sales.
• Price Projection: Based on current execution, FSLY stock could reach $26 by December 2028.
• Potential Gains: That target points to a 44% total return from the current price.
• Annual Return: Investors could see roughly 15% growth each year over the next 2.6 years.

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Fastly (FSLY) opened 2026 with a strong Q1.

Revenue hit $173 million, up 20% from a year ago and near the top of guidance. CEO Kip Compton pointed to fast growth in security and computing as the main drivers.

• Security revenue grew 47% year-over-year, the fourth straight quarter of acceleration.
• Nearly half of the security products sold to new customers came from newer tools like DDoS Protection and Bot Management.
• The Compute-led “other” segment rose 67% year-over-year, its largest quarterly jump ever.
• Network Services grew 11%, about double the market’s pace.
• Net revenue retention climbed to 113% over the trailing year, up from 100% a year earlier.
• Gross margin hit a record 65.1%, and the company swung to a net profit of $22.9 million from a loss a year ago.

Despite the rebound, Fastly trades at $18, leaving room for investors who think its platform shift is just getting started.

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What the Model Says for Fastly Stock

We looked at Fastly as it moves from a pure content delivery network into a broader security and edge compute platform.

• This shift matters. Security and compute carry higher margins and grow much faster than the legacy delivery business. Management expects these two lines to pass a $200 million annual run rate by late 2026.
• AI is adding fuel. Compton sees rising agentic and bot traffic flowing through Fastly’s network, which lifts demand for both security and compute.

Using 12.3% annual revenue growth and 10.9% operating margins, our model projects the stock reaching $26 within 2.6 years.

This assumes a 57.3x price-to-earnings multiple. The lower multiple reflects mid-single-digit price erosion in the network business and a still-young earnings record.

Our Valuation Assumptions

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Our Valuation Assumptions

TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.

Here’s what we used for FSLY stock:

1. Revenue Growth: 12.3%

Fastly’s growth now leans on its faster-moving segments. Security and compute together grew 50% year-over-year in Q1.

Network Services added 11%, roughly twice the market rate.

The company raised full-year 2026 guidance to $710–$725 million, about 15% growth. Retention near 113% supports steady expansion ahead.

2. Operating margins: 10.9%

Profitability is improving quickly.

Operating margin swung from negative 4% to positive 11% in Q1.

Record gross margins and tight cost control helped. Management guides to a 9% operating margin for 2026, with more room as revenue scales.

3. Exit P/E Multiple: 57.3x

Fastly trades near 64x forward earnings today. We assume slight compression to 57.3x.

Network pricing pressure and heavier infrastructure spending weigh on the multiple. As security and compute take a larger share of revenue, the business could earn a steadier valuation.

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What Happens If Things Go Better or Worse?

Fastly faces pricing swings, rising hardware costs, and an uncertain AI ramp. Here’s how the stock might perform under different scenarios through December 2030:

• Low Case: If revenue grows 9.3% a year and net margins settle near 8.7%, investors still see a 45.7% total return (8.6% annually).
• Mid Case: With 10.4% growth and 9.3% margins, the model points to an 87.1% total return (14.7% annually).
• High Case: If AI demand pushes 11.4% growth and margins reach 9.7%, returns could hit 134.3% total (20.4% annually).

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The range depends on how fast security and compute scale, how well Fastly holds pricing in its network business, and whether AI traffic becomes a lasting tailwind.

In the low case, network price erosion deepens and memory costs squeeze margins.

In the high case, agentic AI drives a wave of new security and compute demand while margins keep expanding.

How Much Upside Does Fastly Stock Have From Here?

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All it takes is three simple inputs:

• Revenue Growth
• Operating Margins
• Exit P/E Multiple

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.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!