Investing.com -- Fastly (NYSE: FSLY) saw its stock drop 9% on Thursday, wiping out some of the 14% surge it enjoyed on Wednesday. The earlier spike was fueled by new data showing Fastly plays a major role in powering Meta’s new AI assistant, Muse. However, Citi analyst Fatima Boolani isn’t buying the hype and remains neutral on the stock.

In a research note published Thursday, Boolani argued that the bump in traffic from Meta’s AI won’t automatically lead to the kind of massive profits needed to justify Fastly’s recent stock rally. Instead, she prefers Cloudflare (NYSE: NET) as the best way to invest in this type of AI infrastructure. Even though Cloudflare’s stock is much more expensive, Boolani believes the premium is worth it because the company has a proven track record of actually making money from these new technologies.

The excitement around Fastly started when a Yahoo Finance report highlighted that the company handles a surprisingly large chunk of the web traffic generated by Meta’s Muse. Fastly had hinted at this partnership during an investor event the day before, noting that popular AI assistants were starting to drive massive amounts of traffic across its network. Citi also pointed out that Fastly already counts six of the world’s seven largest tech companies as customers.

The problem, according to Citi, is how Fastly charges for this specific type of AI traffic. AI assistants send lots of tiny, quick requests back and forth, rather than large, heavy files like streaming video. Because Fastly charges customers based on the total amount of data transferred (per gigabyte) rather than the number of requests made, it isn’t making as much money on these lightweight AI interactions. If Fastly charged per request, profits would be much higher, but there’s no sign they are doing that yet.

Boolani also pointed out that Fastly seems to be providing basic, low-profit data delivery for Meta. Fastly makes its real money by selling advanced security features, like protecting websites from bots and hackers. So far, there’s little evidence that Meta is buying these extra, high-profit security services alongside the basic traffic delivery. While the AI storyline sounds great, Citi needs to see Fastly actually selling these add-ons before getting excited.

Compared to its competitors, Fastly’s stock looks cheap. However, just because a stock is cheap doesn’t mean it’s a smart buy, especially if the company’s profit outlook isn’t actually improving. As Boolani concluded, it’s hard to see this AI traffic causing the kind of massive financial boost that would justify jumping into the stock right now.

There is still a glimmer of hope for Fastly, though. If the use of AI assistants explodes, the sheer volume of traffic could become so massive that Fastly’s unfavorable pricing structure won’t matter as much. Additionally, if websites start blocking AI bots from scraping their data—creating what Citi calls "access wars"—Fastly’s newly announced AI security products could suddenly be in very high demand.

Among the top network delivery companies, Citi has a clear favorite. Cloudflare takes the top spot because it has a more complete set of tools, which will be crucial if AI assistants like Muse eventually move to smartwatches or smart glasses where privacy rules are stricter. Cloudflare also has a head start on making money from the AI boom, having already launched tools to manage AI bots and process AI-driven purchases. Meanwhile, competitor Akamai (NASDAQ: AKAM) is seen as a mixed bag facing its own unique business hurdles.

For Citi to change its mind and recommend buying Fastly, two things need to happen. First, Fastly must prove it can sell its more profitable security features alongside its basic Meta AI traffic. Second, the sheer volume of AI requests needs to skyrocket so much that Fastly’s less favorable pricing structure no longer matters. Fastly’s next earnings report will be the big test. Investors will be watching closely to see if the company’s optimistic AI talk actually turns into real revenue.