Wall Street Doesn’t Understand the CDN Business, What AI Agentic Traffic Is, and How Bits are Delivered

Fastly’s stock was down 40% on Thursday, May 7th, one day after its Q1 earnings report, with Piper Sandler saying, “The disappointment was in the core delivery business that saw lower quarter-over-quarter volumes than most were expecting, as pricing remained stable.” Who’s most, and why were they expecting something different?

If you talk to customers, which Wall Street doesn’t, in particular, the large ones, none of them are seeing delivery volumes accelerating faster than projected. These large customers matter most to Fastly, as its top 10 customers accounted for 34% of revenue in Q1. Customers have optimized their encoding, overall bitrates have gone down, and 4K traffic accounts for 1-2% of all bits delivered across CDNs and isn’t growing. There is no catalyst in the market for Wall Street to expect volume increases quarter-to-quarter, outside of a CDN winning a new contract(s).

Another Wall Street firm, KeyBanc Capital Markets, had been bullish on the potential for “agentic use of the internet and web applications to drive CDN traffic higher.” That statement demonstrates no understanding of delivery technology, the scale of traffic requests, and how content is delivered. Agentic traffic refers to traffic generated by autonomous AI agents. AI agents are not watching videos from streaming services or downloading large software files, which account for the largest majority of the bit volume for a CDN vendor. Anything an AI agent does, such as requesting information from a website, accounts for a very small volume of data per request.

As of late 2024–2025, the average home page size is approximately 2.1 MB, according to HTTP Archive. A 30-minute video streamed at 6 Mbps averages 2.7 GB of data delivered. The video delivers 1,200 times as many bits as a webpage, or 2,400 times more for a 60-second video.

Before earnings, year-to-date, Fastly’s stock was up 210%, and it rallied 19% ahead of earnings. Even with the stock down 40% as of 2:35pm ET, it’s still up 212% in the past year. While Fastly raised its full-year 2026 revenue guidance to $710-$720 million, the midpoint was below Wall Street’s $716 million estimate. That, plus Fastly’s Q2 revenue guidance of $170-176M, which would be mostly flat from Q1, would be a realistic explanation for the stock’s decline.

Anyone on Wall Street expecting an acceleration in bit delivery within the CDN product bucket clearly doesn’t understand the market conditions, pricing, contract terms, commitments, or size of files delivered. And yet, so many public data points exist, many from the CDNs themselves, that Wall Street misses.

Disclaimer: I have never bought, sold or traded shares in any public CDN vendor, nor do I own any shares in any private CDN vendor.