What Happened?
A number of stocks jumped in the afternoon session after 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Content Delivery company Cloudflare (NYSE: NET) jumped 8.7%. Is now the time to buy Cloudflare? Access our full analysis report here, it’s free.
- Content Delivery company Fastly (NASDAQ: FSLY) jumped 16.1%. Is now the time to buy Fastly? Access our full analysis report here, it’s free.
Zooming In On Fastly (FSLY)
Fastly’s shares are extremely volatile and have had 56 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 4 days ago when the stock gained 4.7% as strong earnings and upbeat forecasts from several peers boosted the broader software sector.
The gains appeared driven by positive sentiment across the software-as-a-service (SaaS) space. For instance, enterprise software maker Atlassian saw its shares surge after lifting its annual forecast, which in turn lifted peers like Salesforce and ServiceNow.
Similarly, Twilio's stock jumped after it reported first-quarter revenue that beat estimates and raised its own forecast, with its CEO highlighting artificial intelligence as a catalyst.
This positive news from peers helped create a favorable environment for software stocks, which some strategists noted had been underperforming the broader market and were potentially positioned for a comeback.
Fastly is up 211% since the beginning of the year, and at $31.64 per share, it is trading close to 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 $545.01.
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