Fastly Spikes 15% as Oppenheimer Upgrades to Outperform With $35 Target; Datadog Rises 4%, Cloudflare Gains 2%

Fastly (NYSE:FSLY) shares gained 15% to $29.04 after Oppenheimer upgraded the edge network operator to Outperform from Neutral. The call highlights how directly Fastly’s traffic-metered business sits in front of fast-growing artificial intelligence (AI) workloads, a link Oppenheimer believes the market hasn’t fully priced.

Meanwhile, Datadog (NASDAQ:DDOG | DDOG Price Prediction) shares are at $284.62, up 4%. Cloudflare (NYSE:NET) stock is at $350.31, up 2%, trailing Fastly despite running the same kind of edge network.

For a sector read, the First Trust Cloud Computing ETF (NASDAQ:SKYY) is up 1.6%, lagging both Cloudflare and Datadog shares. A wider benchmark, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), is up 0.5%. The cloud sector is being bid as a group, while Fastly stock’s far larger move shows that the upgrade doing much of the work.

Oppenheimer Points to Bigger Deals and AI Agent Traffic

Oppenheimer analyst Param Singh coupled the upgrade with a $35 price target on Fastly stock, building the call on industry checks. Those checks point to rising average deal sizes as customers add Fastly’s newer security products, and they also flag early monetization of agentic AI traffic, which raises network volume and demand for its bot management tools.

Singh argued that Fastly stock trades at a steep discount to other infrastructure software vendors and that the gap can narrow as growth comes through. The newest products in Fastly’s security lineup (AI Runtime, AI Firewall and API Enforcement) reached general availability in September. None of the three has contributed significantly to revenue yet, so the cross-sell the upgrade is built on still lies ahead.

Why Fastly Is Moving Harder Than Cloudflare and Datadog

Fastly runs a content delivery and edge security network and charges largely on traffic volume, so automated requests from AI agents flow straight into its billing.

Cloudflare, the closest and much larger comparison, runs the same kind of edge network with a broader platform on top. Datadog sells observability software, a weaker link to the same trend. That difference in direct exposure lines up with Fastly’s bigger move.

On the bullish side, a traffic-metered business sits in front of a fast-growing workload, and Singh’s discount argument leaves room for a rerate. Rising security deal sizes would add a second engine, part of the same AI expansion we mapped across power, cooling, and networking suppliers in a free report on seven AI infrastructure names.

The bear case: an upgrade built on industry checks and weeks-old products is still an expectation waiting for proof. Fastly has also long been the smaller competitor in a market Cloudflare has been winning, and a steep discount can persist if growth comes in slower.

What to Watch Next

Signs that AI Runtime, AI Firewall and API Enforcement are lifting average deal sizes will be worth watching, along with bot management demand tied to agentic AI traffic, which connects the AI theme most directly to the metered network.

Fastly stock at $29.04 still sits below Param Singh’s $35 target. However, a 15% jump on an upgrade tied to products that launched in September leaves the shares exposed to any sign the cross-sell is arriving slowly. Until the new security tools show up in reported revenue, position sizes should stay measured.

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