Key Stats for Akamai Stock
- Price Change for Akamai stock: 14.7%
- $AKAM Share Price as of Nov. 7: $84
- 52-Week High: $104
- $AKAM Stock Price Target: $95
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What Happened?
Akamai (AKAM) stock surged over 14% on Friday after the cybersecurity and cloud computing company crushed third-quarter expectations and raised its full-year outlook.
In Q3, Akamai reported adjusted earnings of $1.86 per share, higher than the $1.64 consensus estimate. Revenue climbed 5% to $1.05 billion, topping the $1.04 billion forecast.
The standout performance came from Cloud Infrastructure Services, which grew 39% year-over-year to $81 million. That’s a sharp acceleration from the 30% growth rate posted last quarter, while operating margins expanded to 31%, and earnings per share jumped 17% year-over-year.
The company also announced a major new product launch: Akamai Inference Cloud. This platform, powered by NVIDIA’s Blackwell AI infrastructure, brings AI processing capabilities closer to end users at the network edge.
CEO Tom Leighton emphasized this represents a fundamental shift in internet architecture, moving AI inference from centralized data centers to distributed edge locations for faster, more scalable performance.
For the fourth quarter, management guided adjusted earnings between $1.65 and $1.85 per share, with the midpoint of $1.75 beating the $1.65 consensus.
Revenue guidance of $1.065 billion to $1.085 billion also came in slightly above expectations at the midpoint.
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What the Market Is Telling Us About Akamai Stock
The positive reaction to Akamai stock suggests investors are excited about the company’s transformation from a content delivery network into a broader cloud computing and security player.
The 39% growth in Cloud Infrastructure Services demonstrates that this evolution is gaining real traction.
High-growth security products, including API security and Zero Trust segmentation, grew 35% year-over-year.
Management now expects API security alone to reach a $100 million annual run rate by year-end, up from essentially nothing when they acquired Noname Security in June 2024.
The launch of the Akamai Inference Cloud is particularly intriguing for its long-term growth story. Management believes AI inference represents a massive opportunity as applications move from centralized training to distributed execution.
The platform is already live in 17 locations globally, with initial customers including Monks and Harmonic signing up for edge-based AI processing.
What makes this offering unique is Akamai’s existing infrastructure, given it operates over 4,000 points of presence in more than 700 cities worldwide.
This distributed architecture is already being utilized by all three major U.S. cloud providers for edge computing workloads, where low latency is crucial.
One of these providers just signed an expanded multiyear renewal in the quarter.
Management emphasized that AI inference deals could be significantly larger than typical compute contracts, potentially ranging from $50 million to $100 million.
The CapEx requirements should roughly match revenue on a dollar-for-dollar basis, similar to the existing compute business, with the potential for even better margins given the scarcity of GPUs.
Looking ahead, Akamai stock appears positioned to benefit from several tailwinds that include:
- The delivery business, which represents about 30% of revenue, has stabilized after years of price pressure.
- Fewer competitors in the CDN market and improved pricing dynamics are helping.
- The security business has significant room for penetration, especially as API-based applications and AI agents proliferate.
For 2026, management hinted that Cloud Infrastructure Services growth could actually accelerate from current levels, given the momentum in Akamai Inference Cloud.
The company is also completing a go-to-market transformation, hiring specialized sales representatives for security and compute, which is expected to be largely complete by the first half of next year.
The company demonstrated strong capital discipline, repurchasing $800 million of stock year-to-date, marking the most significant annual buyback in the company’s history.
While they paused buybacks in Q3, management emphasized their commitment to returning capital to shareholders over time.
One potential concern is that operating margin expansion may moderate in 2026 as the company invests in growth initiatives.
CapEx as a percentage of revenue could also tick up as large inference cloud deals come online. However, management expects to achieve operating leverage across all three business segments as they scale.
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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!
