As of February 26, 2026, the financial markets are witnessing an extraordinary resurgence in the high-growth technology sector, led by a surprising but formidable frontrunner: Fastly, Inc. (NYSE: FSLY). Once a "fallen angel" of the 2021 pandemic era, Fastly has defied skeptics to become the top-performing stock of February 2026, surging nearly 42% in a single month. This rally isn't merely a speculative bounce; it represents a fundamental shift in how the market perceives the "Edge Cloud" in an era dominated by distributed Artificial Intelligence (AI) and real-time data processing.
Fastly has transitioned from being a niche Content Delivery Network (CDN) into an essential infrastructure layer for the "Agentic AI" economy. By enabling AI models to run inference closer to the end-user through its high-performance Compute@Edge platform, Fastly has positioned itself as the high-speed gateway of the modern internet. Today, we examine the factors that have catapulted FSLY to the top of the leaderboard and whether this momentum is sustainable for long-term investors.
Historical Background
Founded in 2011 by Artur Bergman, Fastly was born out of a desire to make the internet faster and more programmable. Unlike legacy CDNs like Akamai (NASDAQ: AKAM), which relied on massive, geographically dispersed hardware nodes, Fastly’s architecture was built on fewer, more powerful Points of Presence (PoPs) running on a highly optimized software stack based on Varnish.
The company went public in 2019 at $16 per share, quickly becoming a darling of the "work-from-home" trade during the 2020 pandemic. However, the road was not without significant potholes. In June 2021, a global outage caused by a single customer configuration error took down major portions of the internet—including Amazon, Reddit, and The New York Times—bruising Fastly’s reputation for reliability. Following this, the stock entered a multi-year slump as growth slowed and profitability remained elusive. The appointment of Todd Nightingale as CEO in 2022 signaled a shift toward "financial rigor," which laid the groundwork for the 2025-2026 breakout under current CEO Kip Compton.
Business Model
Fastly operates a programmable edge cloud platform designed to speed up websites and applications. Its business model is primarily usage-based, meaning revenue scales as customers process more data and execute more code on Fastly’s servers.
Primary Revenue Sources:
- Edge Delivery: Traditional CDN services including caching, media streaming, and content acceleration.
- Security: High-margin services including Next-Gen WAF (Web Application Firewall), Bot Management, and DDoS protection.
- Edge Computing: Fees associated with Compute@Edge, where developers run serverless functions at the network's edge.
Fastly targets high-traffic enterprise customers who require "instant" cache purging and deep programmability. This focus on the "power user" segment has resulted in a high Average Enterprise Customer Spend, which grew significantly throughout 2025.
Stock Performance Overview
The performance of FSLY in February 2026 is the culmination of a three-year turnaround strategy.
- 1-Year Performance: FSLY has returned 112% over the last 12 months, significantly outperforming the S&P 500 and the Nasdaq-100.
- 5-Year Performance: On a 5-year basis, the stock is finally approaching its 2021 all-time highs, recovering from a 90% drawdown that occurred between 2021 and 2023.
- 10-Year Performance: Long-term holders who entered during the 2019 IPO have seen an annualized return of approximately 24%, though the journey has been characterized by extreme volatility.
The February 2026 breakout was triggered by the company's Q4 2025 earnings report, which showed the first significant "AI-driven" revenue contribution in the company's history.
Financial Performance
Fastly’s recent financial results reflect a company that has finally found its footing. In its most recent reporting period (Q4 2025), the company achieved:
- Revenue: $178 million for the quarter, a 19% year-over-year increase, beating analyst estimates.
- Profitability: For the full year 2025, Fastly reported its first-ever annual non-GAAP net income of $19.7 million.
- Margins: Non-GAAP gross margins expanded to 61.2%, driven by a shift toward higher-margin security and compute products.
- Balance Sheet: The company successfully refinanced its 2026 convertible notes into 2028 maturities, alleviating immediate liquidity concerns and ending 2025 with over $400 million in cash and equivalents.
Leadership and Management
In June 2025, Fastly promoted Kip Compton to CEO, succeeding Todd Nightingale. Compton, previously the company’s Chief Product Officer, was the architect of the "Product-Led Growth" strategy that prioritized the developer experience.
Under Compton’s leadership, the management team has focused on "Product Velocity"—releasing more features in 2025 than in the previous three years combined. Founder Artur Bergman remains the "Chief Architect," ensuring that Fastly’s technical edge remains intact, while CFO Richard Wong has been credited with the disciplined cost-cutting and debt restructuring that made 2025 a profitable year.
Products, Services, and Innovations
The catalyst for Fastly’s 2026 dominance is its innovation in the WebAssembly (Wasm) space.
- Compute@Edge: This is the company's crown jewel. By using a Wasm-based runtime (Lucet), Fastly allows developers to run code with "near-zero" cold start times. In 2026, this has become the preferred environment for Edge AI Inference, where lightweight AI models process data locally before sending it to the central cloud.
- AI Assistant (Launched Jan 2026): Fastly recently launched a natural-language agent that allows DevOps teams to secure and configure their networks via simple prompts, reducing the need for complex VCL (Varnish Configuration Language) coding.
- Next-Gen WAF: Integration of the Signal Sciences acquisition is now complete, offering a unified security layer that protects against 100% of the OWASP Top 10 vulnerabilities with minimal latency impact.
Competitive Landscape
Fastly competes in a "Big Three" market with Cloudflare (NYSE: NET) and Akamai (NASDAQ: AKAM).
- Cloudflare: While Cloudflare has a larger total customer base and a more expansive "Zero Trust" suite, Fastly has carved out a premium niche for high-performance, CPU-intensive tasks. In 2025-2026, developers have increasingly favored Fastly for complex AI workloads due to its superior "Time-to-First-Byte" (TTFB) metrics.
- Akamai: The legacy giant remains the revenue leader, but it struggles with "technical debt." Fastly has successfully poached several major media and e-commerce accounts from Akamai by offering better programmability and more transparent pricing.
Industry and Market Trends
Three macro trends are currently favoring Fastly:
- The Shift to Agentic AI: As AI moves from simple chatbots to autonomous agents, the need for low-latency execution at the edge has exploded.
- Data Sovereignty: Tightening global regulations mean data often cannot leave its country of origin. Fastly’s distributed edge nodes allow for local data processing that satisfies these compliance needs.
- Consolidation of the Security Stack: Enterprises are moving away from "point solutions" and toward integrated platforms that combine delivery, compute, and security.
Risks and Challenges
Despite the February 2026 rally, significant risks remain:
- Customer Concentration: A small number of "whale" customers still account for a disproportionate share of revenue. The loss of a single major client (e.g., a top-tier social media platform) could be devastating.
- Execution Risk: The transition to Kip Compton’s product-led strategy is still in its early stages. Any slowdown in product innovation could lead to market share loss to Cloudflare.
- Valuation: Following the 42% surge, FSLY is currently trading at a premium price-to-sales multiple compared to its historical average, making it vulnerable to any earnings miss.
Opportunities and Catalysts
- M&A Potential: Analysts frequently cite Fastly as a prime acquisition target for hyperscalers like Google Cloud (NASDAQ: GOOGL) or Oracle (NYSE: ORCL) looking to bolster their edge capabilities.
- Expansion into "Stateful" Computing: The recent launch of Fastly’s edge storage solution allows developers to build entire databases at the edge, a move that could significantly increase the company’s Addressable Market (TAM).
- Deepening Enterprise Penetration: With the remediation of its 2024 "material weakness" in internal controls, Fastly is now more attractive to conservative Fortune 500 companies.
Investor Sentiment and Analyst Coverage
Investor sentiment has turned "decidedly bullish" in February 2026. Institutional ownership has climbed to 84%, with notable increased positions from Vanguard and BlackRock. On social media platforms and retail trading forums, the narrative has shifted from "Can Fastly survive?" to "How high can Fastly go?"
Wall Street analysts are also adjusting their models. Following the Q4 2025 earnings beat, several tier-one banks raised their price targets for FSLY, citing the company’s successful pivot to AI infrastructure. The consensus rating has moved from "Hold" to "Strong Buy" over the last 90 days.
Regulatory, Policy, and Geopolitical Factors
Fastly operates in an increasingly complex regulatory environment.
- GDPR and Data Privacy: Fastly’s "Edge Privacy" features help customers comply with strict EU data laws, turning a regulatory burden into a competitive advantage.
- Section 230 and Content Moderation: As a neutral infrastructure provider, Fastly is largely shielded from liability for the content it delivers, but shifting political winds in the U.S. regarding "carrier-like" regulations for tech platforms remain a long-term watchpoint.
- Geopolitical Resilience: Fastly’s decision to limit its footprint in certain high-risk jurisdictions has reduced its exposure to geopolitical trade wars, though it also limits its total global reach.
Conclusion
Fastly’s ascent to the top-performing stock of February 2026 is a testament to the power of a successful corporate pivot. By focusing on the high-performance needs of the AI era and achieving the long-promised goal of non-GAAP profitability, the company has reinvented itself for a new decade of computing.
While the stock’s rapid ascent warrants caution regarding short-term overextension, the underlying business fundamentals suggest that Fastly is no longer just a "delivery" company. It is a vital engine for the intelligent, distributed internet of tomorrow. For investors, the key metric to watch throughout the remainder of 2026 will be the continued growth of Compute@Edge and the company's ability to maintain its technological lead in a crowded and well-funded competitive field.
This content is intended for informational purposes only and is not financial advice.
