A Look at Fastly (FSLY) Valuation as Rate Cut Optimism Fuels Tech Rally

Recent data revealed that inflation came in softer than expected, which sparked optimism among investors about a potential pause or reduction in Federal Reserve interest rates. Fastly (FSLY), along with other tech stocks, rallied as sentiment shifted across the sector.

See our latest analysis for Fastly.

Fastly’s share price has jumped over 21% in the past three months, showing strong momentum after a choppier start to the year. Its 1-year total shareholder return of almost 13% reflects solid long-term gains despite volatility elsewhere in tech. This recent rally suggests that investor sentiment around growth stocks like Fastly may be improving as macroeconomic concerns ease and risk appetite returns.

If you’re interested in finding more tech innovators with promising momentum, now’s a great time to explore See the full list for free.

The question now is whether Fastly’s surge signals an attractive entry point for investors, or if expectations of future growth are already fully reflected in its share price. This could leave little room for upside from here.

Most Popular Narrative: 8% Overvalued

Fastly’s most widely followed narrative pegs its fair value estimate slightly below the last close, hinting that the current share price may be running ahead of fundamentals.

Ongoing adoption of advanced security solutions, including next-generation WAF, DDoS, and bot mitigation, positions Fastly to capitalize on rising enterprise demand for resilient edge security as cyber threats escalate. This supports future revenue growth and higher-margin service lines.

Read the complete narrative.

Curious about the math behind this bold conclusion? The secret is in a set of future projections. Not just typical revenue gains, but aggressive margin improvements and ambitious long-term profit forecasts set the stage for this valuation. Find out which financial assumptions contribute to this assessment.

Result: Fair Value of $7.67 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition from larger cloud providers and ongoing dependence on a handful of major customers could quickly shift Fastly’s outlook.

Find out about the key risks to this Fastly narrative.

Another View: Discounted Cash Flow Tells a Different Story

While multiples suggest Fastly looks attractively priced compared to peers, our DCF model points in the opposite direction. Fastly is trading above its estimated fair value of $6.94, so this method considers the shares overvalued. Does the market see something the cash flow model is missing?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Fastly Narrative

If you see things differently or want to dive in and check the numbers yourself, you can build a custom narrative from scratch in just minutes, and Do it your way

A great starting point for your Fastly research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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