Fastly Inc (NASDAQ: FSLY) just reported its first profitable year on a non-GAAP basis, triggering what many media reports are framing as a “short squeeze”.
In Q4, the cloud-computing company saw revenue pop 23%, helping its per-share earnings come in at 12 cents – more than double the 6 cents that analysts had forecast.
At the time of writing, Fastly is trading at a 52-week high of about “$15”. Still, a senior William Blair analyst says it’s not yet too late to invest in this San Francisco-headquartered firm.
Is it too late to invest in Fastly stock?
According to William Blair analyst Jonathan Ho, Fastly’s fourth-quarter earnings release confirms it’s an “underappreciated artificial intelligence (AI) play.”
The rise of large language models (LLMs) and agentic AI that browses and synthesizes web data is driving a massive increase in traffic to Content Delivery Networks (CDNs).
As these agents continue reading more of the web, Fastly’s volume will surge further – potentially leading to higher revenue through the remainder of 2026, he told clients.
Note that FSLY stock pushed past all of its major moving averages (MAs) on Thursday, indicating bulls have taken control and, therefore, the upward momentum could sustain in the near-term.
FSLY shares aren’t inexpensive to own
William Blair recommends owning Fastly shares also because the company’s management remains convinced that it can replicate Q4 strength in the new financial year as well.
On February 12th, the Nasdaq-listed firm guided for $710 million in revenue on 26 cents per share of earnings for 2026 – both miles ahead of Street estimates.
The company’s outlook reinforces that Q4 profitability isn’t a one-off stroke of luck, but the result of a leaner cost structure meeting a high-margin traffic surge.
Put it together with a price-to-sales (P/S) multiple of “2.28” only, and FSLY immediately starts to look like a strong candidate for a long-term investment.
How to play Fastly Inc after Q4 earnings?
While CDNs are notoriously low-margin businesses, Fastly managed a “650 basis points increase” in its gross margin to a whopping 64% in the fourth quarter.
This proves it’s achieving operating leverage – growing revenue by 23% without having to spend proportionally more on bandwidth and servers.
All in all, Fastly’s quarterly results and impressive guidance validate the belief that “agentic” web traffic is becoming a predictable and scalable revenue stream rather than an experimental niche.
It reinforces the narrative that it’s successfully pivoted from a struggling legacy CDN into a high-growth edge computing powerhouse.
Finally, options traders seem to agree with William Blair’s constructive outlook on FSLY shares.
The upper price on contracts expiring mid September currently sits at about “$18.50” – indicating potential upside of more than 22% over the next six months.
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