Fastly's 219% Q1 Surge: Here's the Growth Math That Still Works in 2026
Tech investors spent the first quarter of 2026 chasing the next AI infrastructure winner. While many legacy cloud names treaded water, one edge-cloud specialist turned in a performance that turned heads. Fastly (FSLY) shares climbed from $10.18 at the close of 2025 to $32.36 by April 1, 2026 – a 219% surge. Savvy investors who stuck around through 2025's slower quarters now wonder: Is this the top, or just the warm-up? Let's look at the numbers that explain the run and why the case for more upside remains intact.
What Ignited Fastly's Q1 Rocket
The spark came straight from the December books. Fastly's Q4 earnings release showed record revenue of $172.6 million – up 23% year-over-year and the fastest quarterly growth of 2025. Network services rose 19%, security jumped 32%, and the newer Compute and Observability segment exploded 78%. Non-GAAP gross margin expanded to a record 64% from 57.5% a year earlier.
Enterprise customers with more than $100,000 in annualized revenue climbed to 628, up 32 from Q4, while last-12-month net retention rate stood at 110%. That's a fancy way of saying existing customers spent 10% more on average. Top-10 customers also contributed 34% of revenue, yet revenue outside that group still grew 20%. Importantly, remaining performance obligations – committed future revenue – rose 55% to $353.8 million. Those figures explain why the stock refused to pause after the February report.
AI Tailwinds Point to Even Faster Growth
Fastly's edge platform sits exactly where AI workloads want to run: close to users, with programmable logic that can filter, optimize, or secure traffic in real time. Guidance shows the tailwinds: For Q1, Fastly expects revenue between $168 million and $174 million – roughly 16% to 20% growth over Q1 2025, with the full-year hitting $700 million to $720 million, implying 12% to 15% growth on top of 2025's accelerated base. Non-GAAP operating income should land between $14 million and $18 million for the quarter. The company also launched an AI Assistant beta and expanded API security tools, moves designed to capture the edge-intelligence layer that powers authorized AI agents while blocking abuse.
Fastly vs. the Pack
Fastly isn't the biggest player, but it is gaining ground where it counts. Cloudflare (NET) holds 22% of the reverse-proxy market; Fastly and Akamai (AKAM) trail. Yet Fastly's architecture delivers sub-second configuration changes and full edge compute, advantages that Fastly's own comparison materials highlight against Akamai's staged propagation and Google Cloud CDN's limited logic.
Fastly's 110% net retention and 32% enterprise-customer increase outpaced the broader CDN industry's mid-teens average. That combination of faster growth and margin expansion is what investors rewarded in Q1.
Bottom Line
Fastly has shifted from a cash-burn story to profitable growth engine, with AI providing a structural tailwind that peers cannot match as cleanly. Shares now trade at a forward price-to-earnings multiple around 92 times estimates, so valuation is no longer cheap. That said, with free cash flow positive, revenue guidance rising, and enterprise momentum building, the setup favors continued upside for investors who size positions appropriately.
Watch for Fastly's Q1 2026 report in early May for confirmation that the acceleration holds. If it does, this run has plenty of room left.