Fastly Inc. (NASDAQ:FSLY) saw its share prices climb by 13.69 percent on Wednesday to close at $29.65 apiece after outlining its growth targets over the next three years, thanks to rosy prospects from AI.
In its recently concluded Investor Day, Fastly Inc. said that it is targeting a compounded annual growth rate of 14 to 21 percent to a range of $1.1 billion to $1.3 billion through 2029.
Operating margin is expected to hit 20 to 22 percent, while gross margin is projected at 67 to 71 percent.
Its optimism stemmed from the strengthening demand for security services amid the rapidly developing AI, which industry leaders warn presents mounting risks to the safety of individuals.
Photo by Tima Miroshnichenko on Pexels
Price Target Upgrade
Following the announcement, two analysts raised their price targets for the company, albeit one recommended a buy while the other rated underperform.
Freedom Capital Markets hiked its price target for the stock to $37 from $32 previously, while maintaining a buy recommendation.
Meanwhile, BofA Securities increased its price target to $22 from $20, but kept its underperform rating.
For BofA, Fastly Inc. used its Investor Day to reposition from a content delivery network toward a unified edge platform offering delivery, security, compute, observability, and AI. However, it deemed the financial updates as lackluster, prompting a weak rating.
Meanwhile, two other firms reaffirmed their ratings and price targets for Fastly Inc..
RBC Capital maintained its sector perform rating and $25 price target, while DA Davidson kept its neutral rating with a price target of $23.
New Services for AI
The updates followed Monday’s launch of its new runtime control, firewall, and API Security capabilities designed to give organizations real-time visibility and control across their AI systems.
These capabilities help organizations govern AI model access and usage, protect the AI applications powering their business, and control how AI agents access enterprise APIs on the Fastly platform.
“As enterprise AI shifts from experimentation to business-critical production, the focus turns to leveraging AI safely at scale. Organizations now need real-time control over model routing, spend, agent authorization, response optimization, and service reliability as traffic expands. Fastly is seeing that shift directly,” it said.
“Across Fastly’s network, machine-generated traffic crossed 50 percent in July and August this year, while AI traffic grew 6.5 times faster than human traffic from January through May this year. Also, financial pressure is rising alongside this growth, with McKinsey finding that 93 percent of organizations are exceeding their AI budgets,” it noted.
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