Key Stats for AKAM Stock
- Price Change for AKAM stock: -14.1%
- AKAM Share Price as of Feb. 20: $94.17
- 52-Week High: $114
- AKAM Stock Price Target: $103
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What Happened?
Akamai Technologies (AKAM) stock fell 14.1% after the company released fourth-quarter results and issued a weaker-than-expected outlook for the first quarter. While Akamai delivered a solid Q4 earnings beat, management’s commentary around near-term profitability shifted investor focus away from backward-looking results.
Adjusted EPS for Q4 came in at $1.84, which exceeded analyst expectations of $1.76, and revenue increased 7% year over year. However, management guided Q1 adjusted EPS to a range of $1.50 to $1.67, which came in below Street expectations and raised concerns about margin pressure.
Management cited higher memory and infrastructure costs, which are increasing server expenses and weighing on near-term margins. At the same time, Akamai indicated it plans to invest more aggressively in cloud and security infrastructure, which pushed expected capital intensity higher.
For 2026, Akamai guided capital expenditures at 23% to 26% of revenue, up meaningfully from about 19% in 2025. That step-up in investment prompted investors to reassess earnings power, even as management reiterated confidence in long-term growth initiatives.
Full-year 2026 adjusted EPS guidance of $6.20 to $7.20 also landed below prior expectations.
As a result, the stock repriced lower despite a fundamentally solid quarter.
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What the Market Is Telling Us About AKAM Stock
The sharp selloff suggests investors are prioritizing near-term margin visibility and cash flow durability, not just revenue growth. That reaction reflects heightened sensitivity to cost inflation and capital spending across the technology sector.
Akamai’s growth mix continues to shift toward higher-growth segments, but the transition is uneven. In Q4, Cloud Infrastructure Services revenue jumped 45% to $94 million, highlighting strong adoption of newer offerings.
Cloud Computing revenue grew 14% year over year to $191 million, and Security revenue increased 11% to $592 million. However, Delivery revenue declined 2% to $311 million, showing continued softness in the legacy content delivery business.
Profitability remains solid, but margins have trended lower as investment has increased. Over the last twelve months, Akamai reported a gross margin of 58.9% and an EBIT margin of 14.9%, down from peak levels.
Cash generation remains a key strength and provides flexibility. Over the last twelve months, Akamai generated $669 million in free cash flow, representing a 15.9% free cash flow margin.
The company has continued to emphasize share repurchases as its primary shareholder return lever. Over the last year, Akamai repurchased approximately $924 million of its own shares, reducing the share count meaningfully.
However, leverage remains a consideration as investment spending rises. Akamai ended the period with $3.8 billion in net debt, and net debt-to-EBITDA stands at 3.1x, which keeps balance sheet discipline in focus.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
