Fastly provides a high-performance content delivery network (CDN), edge-computing capabilities, security services, and web-performance tools. The San Francisco-based company promotes its platform as a means for organizations to move data and applications closer to end users, reducing latency and improving reliability. These functions are viewed as increasingly important as businesses deploy AI models that require rapid data processing and low-latency responses.
The recent analyst activity surrounding Fastly was highlighted in a compilation of “12 Cheap Small-Cap Stocks to Invest In Before the Next Breakout,” where the company ranked sixth. While the report acknowledged Fastly’s potential, it also argued that certain AI-oriented stocks may offer greater upside potential with comparatively lower downside risk. The commentary aligned with the mixed stance reflected in Citi’s neutral view and RBC’s sector-perform rating.
Both banks’ target revisions converge at the $10 mark, but their underlying messages differ. Citi’s reduction reflects a more cautious stance on valuation amid broader sector dynamics, whereas RBC’s increase points to incremental optimism tied to AI-related revenue opportunities. Combined, the moves underscore a market environment in which infrastructure software vendors remain closely linked to the trajectory of enterprise AI adoption, yet company-specific factors continue to shape individual forecasts.
The broader infrastructure software segment attracted heightened investor interest in 2025 as enterprises accelerated digital-transformation plans and adopted generative AI tools. Citi’s sector outlook suggests that this momentum is likely to persist, propelled by sustained demand for secure, scalable, and low-latency computing environments. According to a Reuters technology report, global spending on cloud infrastructure services rose steadily throughout 2025, providing a foundation for continued growth opportunities in 2026.
RBC’s commentary echoed the importance of AI in shaping technology budgets, stating that investment trends have begun to stabilize even as economic uncertainty lingers. The bank cited generative AI as a primary driver of innovation, pointing to ongoing pilot projects and production rollouts that require robust edge and cloud infrastructures—areas where Fastly competes.
Despite the optimistic view on sector-wide demand, both analysts flagged potential risks. These include competitive pressures within the CDN and edge-computing markets, execution challenges as Fastly expands its service portfolio, and macroeconomic variables that could affect enterprise spending. The balanced assessments explain the maintenance of Neutral and Sector Perform ratings rather than outright buys.
Fastly’s inclusion on the small-cap investment list stems from its market capitalization relative to larger cloud providers, as well as its exposure to secular growth themes such as AI, security, and real-time digital experiences. However, the same small-cap status can introduce heightened volatility, prompting some analysts and investors to weigh alternative AI plays that may combine larger balance sheets with similar growth prospects.
The sequence of analyst revisions has left Fastly’s target price aligned at $10, suggesting a potential valuation reference point for market participants. Whether the company can surpass this level could hinge on its ability to convert AI-related interest into measurable revenue gains, execute on planned product innovations, and differentiate its platform against incumbent and emerging competitors.
Looking ahead, investors are likely to focus on Fastly’s upcoming earnings reports and any forward-looking statements regarding enterprise demand trends, AI workload expansion, and margin improvement initiatives. As AI adoption continues to shape infrastructure requirements, Fastly’s performance will serve as one barometer for how smaller cloud and edge providers navigate an evolving and highly competitive landscape.
Crédito da imagem: Unsplash
