This Underrated AI Stock Jumped 72% a Day After Posting 'Stellar' Q4 Results

Internet infrastructure company Fastly posted Q4 adjusted earnings of $0.13 per diluted share, swinging from a loss of $0.02 from the prior year quarter. Revenue also surged 23% year-over-year to $172.6 million, driven by 32% revenue growth in the security segment and a 19% surge in network services sales.

'Fastly delivered a stellar quarter driven by rising contribution from agentic AI traffic, which we believe is still in its infancy. At the same time, customers signed larger deals with Fastly, reflecting broader commitments across network delivery, security, and compute,' said William Blair analyst Jonathan Ho.

Fastly's content delivery network (CDN) works to safeguard websites as well as speed up ecommerce transactions and business software downloads by placing data and application logic closer to end users. Analysts believe that these attributes position Fastly to benefit from the growing adoption of AI agents.

'As the Internet moves into the age of agentic AI, it's clear that the edge will play a pivotal role,' Fastly CEO Kip Compton said during the earnings call. 'Our infrastructure is designed to power this edge intelligent layer, optimizing authorized AI agents and blocking abuse.'

'Our fourth quarter results mark an inflection in Fastly's growth as we achieved record revenue, gross margin, and operating profit. In 2025, we made significant progress on Fastly's transformation and delivered great results. As we look toward 2026, we anticipate continued momentum, with AI as an increasing tailwind for our business,' Compton added.

For 2026, the edge cloud platform provider expects adjusted EPS of $0.23 to $0.29 on revenue of $700 million to $720 million. 'We anticipate continued momentum, with AI as an increasing tailwind for our business,' Compton added.

He also explained the company's focus on cross-sell opportunities and execution, citing major clients directing more traffic to Fastly's platform due to stability and performance benefits.

Big Stock Move Indicates Renewed Business Perception

The Fastly stock has been very volatile and recorded 38 price movements of over 5% in the past year. However, the stock price jump following Q4 earnings is rare even for Fastly, and could imply that the results considerably changed the market's perception of the business.

The stock gained nearly 6% three days ago after analysts signalled that the recent 'SaaSpocalypse' sell-off had pushed company valuations into oversold territory, triggering massive opportunistic buying. While the sector is affected this year by concerns that autonomous AI agents will replace traditional seat-based subscriptions, institutional investors started rotating back into 'sticky' incumbents.

This trend was likely supported by a Barclays research report, which explained that corporate transitions away from legacy systems take years, providing a moat for established providers in compliance and governance.

Meanwhile, Raymond James analyst Frank Louthan believes Fastly's turnaround is gaining momentum.

'One factor improving the outlook is customers' need to manage increasingly complex traffic patterns and demands. We believe AI-based traffic has brought increased complexity to network traffic needs,' Louthan said. 'Management has taken a different approach to how they operate the business, paying careful attention to patterns with customers and how they interact with them. What is probably going to prove to be the most impactful result from this approach is a policy of asking for revenue commitments from customers.'

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