DA Davidson raised its price target on Fastly Inc. (NASDAQ:FSLY) to $13.00 from $9.00, while retaining a Neutral rating on the content delivery network provider. The upward revision came after Fastly reported fourth-quarter results that materially beat market expectations and supplied initial guidance for 2026 that exceeded analyst forecasts.
News of the results sent indications that Fastly shares could jump roughly 32% in after-hours trading. DA Davidson pointed to several operational trends behind the more constructive view: traffic growth appears stronger than in recent years and the emergence of agentic AI-driven traffic is acting as a demand catalyst for the company’s edge and delivery services.
One notable improvement cited by the firm was a reduction in price compression. Where Fastly had previously experienced mid-teens price compression, DA Davidson observed mid-single-digit compression in the fourth quarter. The firm interpreted this shift as evidence that Fastly is retaining more pricing power than during earlier periods.
Despite those positives, DA Davidson elected to keep a Neutral rating, emphasizing concentration risk as a key restraint. The analyst highlighted that Fastly’s top 10 customers rose from 32% of revenue to 34% quarter-over-quarter, and that those customers accounted for 56% of sequential revenue growth. That customer concentration, DA Davidson argued, leaves the revenue base more exposed to moves by a small set of large accounts.
Fastly’s published fourth-quarter financials underpin the analysts’ reactions. The company reported revenue of $172.6 million, ahead of the consensus estimate of $161.4 million and representing a 22% year-over-year increase. Operating profit was $21.2 million, and earnings per share came in at $0.12, double the $0.06 projected by analysts.
Other brokerages adjusted their views following the quarter. RBC Capital raised its price target to $12, citing what it called "early signs of durable acceleration and continued margin execution." Piper Sandler lifted its price target to $14, pointing to strong performance and market share gains. William Blair upgraded the stock to Outperform, referencing the company’s potential to capture growth from AI-related traffic increases.
Analysts noted that Fastly is benefiting from increased traffic among its larger customers alongside technological advancements related to AI. These two dynamics were presented as complementary drivers: higher volumes from big accounts lift near-term results while AI-driven traffic provides a structural tailwind for edge computing and delivery services.
DA Davidson’s decision to boost its target while keeping a Neutral stance captures a mix of improving operational indicators and lingering risks. The firm’s commentary underscores the tension between evidence of stronger pricing and traffic trends and the persistent revenue concentration that could amplify volatility if a few large customers slow or change behavior.