What Happened?
Shares of edge cloud platform Fastly (NASDAQ: FSLY) fell 5.6% in the afternoon session after competitive pressure from artificial intelligence continued to weigh on the software sector following a Bloomberg report that Anthropic expects its upcoming initial public offering to match or beat the size of SpaceX’s record-setting debut.
The Claude developer is preparing to file publicly as soon as the end of this month for a share sale that could rival or exceed SpaceX’s $75 billion initial offering, according to Bloomberg. The report noted that Anthropic raised $65 billion in May at a $965 billion valuation, and its preliminary second-quarter revenue topped $11.5 billion, with an annualized run rate hitting $65 billion by the end of July. The accelerated timeline compounds existing sector concerns after OpenAI Chief Financial Officer Sarah Friar told employees her AI lab will also go public in 2027 or sooner, CNBC reported.
As these frontier labs race to go public, they will gain more visibility. Investors will also be able to bet directly on these generative AI platforms, possibly denting the scarcity premium of enterprise SaaS companies, since the labs will boast recurring revenue with faster topline growth. Going public will mean that these AI labs begin disclosing more information too, which could also show that they are taking wallet share of enterprise IT spend. These dynamics could combine to ultimately create a new trade of going long these labs, and shorting enterprise SaaS stocks.
The shares closed the day at $22.70, down 4.2% from the previous close.
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 63 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 16 days ago when the stock gained 7.7% on the news that shares across the enterprise software, cybersecurity, and cloud infrastructure sectors caught a massive bid in Tuesday's premarket session.
The rally was ignited by a blockbuster earnings report from data analytics giant Palantir (NYSE: PLTR), whose stock skyrocketed over 26%, acting as a rising tide that lifted dozens of high-growth tech peers—ranging from data players like Snowflake and Datadog to cybersecurity leaders like CrowdStrike and Palo Alto Networks. The primary catalyst for the sector-wide surge was Palantir’s exceptional second-quarter print and upwardly revised full-year revenue outlook.
Citing unprecedented demand for its Artificial Intelligence Platform (AIP), Palantir posted explosive growth in both its core U.S. commercial business and government contracting segments. By explicitly demonstrating that enterprise customers are aggressively deploying—and paying for—advanced AI capabilities, Palantir extinguished lingering market fears that the AI boom was merely infrastructure hype without near-term software monetization.
Beyond Palantir's blowout quarter, this "risk-on" environment was heavily turbocharged by shifting macroeconomic and geopolitical winds. News that the U.S. and Gulf allies are shifting toward diplomatic talks to reopen the Strait of Hormuz effectively de-escalated fears of a broader Middle East conflict. This geopolitical relief valve caused a sharp pullback in oil prices and inflation expectations, driving Treasury yields lower.
For software companies—whose valuations are highly sensitive to borrowing costs and the discount rates applied to future cash flows—this sudden drop in rates provided the perfect macro tailwind. Together, the combination of lower yields and definitive proof of AI monetization sparked an aggressive premarket rotation back into growth-oriented tech equities.
Fastly is up 124% since the beginning of the year, but at $22.81 per share, it is still trading 31.9% 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 $557.29.
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