What Happened?
Shares of edge cloud platform Fastly (NASDAQ:FSLY) fell 39.4% in the afternoon session after first-quarter results and upgraded guidance were not enough to satisfy investors' lofty expectations following a massive rally in the stock.
The company reported revenue of $173 million, a nearly 20% year-over-year increase, and delivered an adjusted profit per share that was 50% above Wall Street's expectations. However, the stock had already soared on artificial intelligence hype, climbing roughly 270% in the three months leading up to the report. This created sky-high expectations that the results failed to meet, triggering a sharp sell-off. Despite management lifting its full-year guidance for both revenue and earnings, the market was seemingly looking for an even stronger performance to justify the stock's premium valuation.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Fastly’s shares are extremely volatile and have had 57 moves greater than 5% over the last year. But moves this big are rare even for Fastly and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 16.1% on the news that peer, DigitalOcean reported stellar Q1 2026 earnings report. DigitalOcean reported a 22% year-over-year revenue increase and, crucially, a 221% surge in AI customer annual recurring revenue (ARR), proving that inference demand is moving from experimental to production scale. Because DigitalOcean specializes in serving small-to-medium digital native enterprises, its success signaled that AI adoption is broadening beyond tech giants, fueling optimism for other edge infrastructure providers.
Fastly is up 85.4% since the beginning of the year, but at $18.89 per share, it is still trading 43.6% below its 52-week high of $33.50 from April 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Fastly’s shares 5 years ago would now be looking at only $451.05.
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