What happened

Shares of edge computing infrastructure-as-a-service (IaaS) company Fastly (NYSE:FSLY) surged on Tuesday. The stock was up 12.6% as of 2:50 p.m. EDT.

The stock's gain extends a huge run higher since the company's earnings report last week. The stock's gain on Tuesday likely reflected continued optimism following the company's strong first quarter and a bullish day in the market for many high-growth tech stocks.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Last week, Fastly announced 38% revenue growth and provided an outlook for the second quarter that was far ahead of analysts' expectations. Furthermore, management said it expected second-quarter revenue to be between $70 million and $72 million and non-GAAP (adjusted) earnings per share to be between a loss of $0.02 and breakeven. Analysts, on average, were expecting revenue of $60 million and an adjusted loss per share of $0.11.

Trends from COVID-19, including consumers staying at home and using the internet more, are positively impacting the tech company since its business model is usage-based. But many of the drivers for Fastly's business are organic, including strong growth in enterprise customers and the impact of its marketing efforts paying off as companies realize that if they want to innovate rapidly, they need more control on the edge of the internet, where Fastly's value proposition shines.

Also helping give Fastly's stock a boost, many high-growth SaaS stocks rose a few percentage points or even more on Tuesday as investors continue to favor these companies for their recession-resistant recurring revenue. Datadog, a monitoring and analytics platform for cloud-based systems, led the way. Its shares soared more than 20% on Tuesday, fueled by strong first-quarter results.

Now what

The few analysts that commented on Fastly's recent quarterly update have all responded optimistically, raising their price targets and reiterating buy ratings for the stock.

Going forward, investors will be looking for Fastly's strong momentum to persist. Fastly's second-quarter revenue guidance implies 57% revenue growth based on the midpoint of the company's forecast.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.