Fastly Inc (NASDAQ:FSLY) shares are trading lower on Thursday. The shares reverted from an increase on Wednesday after an analyst raised the price forecast on the stock following the recent investor day event.
DA Davidson analyst Rudy Kessinger reaffirmed a Neutral rating and increased the price forecast from $21 to $23.
Analyst Views
The DA Daivdson analyst expects Muse and other AI agents to generate some incremental traffic for Fastly, but questions whether the increase will be large enough to materially affect revenue growth in the near term.
Fastly generates 73% of its second-quarter revenue from CDN bytes, and the analyst believes widespread adoption of personal AI agents such as Muse is unlikely to create the surge in traffic currently reflected in the stock.
Assuming an average browser task uses 5 MB of data and each user makes five requests daily, an average Muse user would consume about 9 GB annually.
At 1 billion daily active users, or roughly 28% of total Meta DAUs, this would represent about 9,125 PB of annual traffic. Fastly highlighted an Investor Day customer paying more than $50 million for 28,000 PB, implying potential revenue of about $16.3 million if Fastly handled 100% of scaled Muse traffic.
Kessinger noted this is a rough estimate and that much of the traffic could replace human activity rather than add to it, but even the full opportunity would equal only about 2% of consensus CY2026 Fastly revenue.
The analyst expects Fastly’s security business to benefit from AI because security products monetize requests rather than bytes.
However, the company said it has not yet seen security customers renew early at higher request tiers because of AI. The analyst also noted that WAF, Bot Management and DDoS are mature markets where growth largely depends on competitive displacement.
Also on Wednesday, BofA Securities analyst Tal Liani maintained an Underperform rating and raised the price forecast from $20 to $22.
FSLY Stock Price Activity: Fastly shares are trading lower by 8.40% at $27.16 at the time of publication on Thursday, according to Benzinga Pro data.
Photo via Shutterstock
Login to comment