Last Update 17 Feb 26

Fair value Increased 1.55%

AKAM: Fair Outlook As AI Infrastructure And Compute Transition Tests Execution

The Akamai Technologies analyst price target has been raised by about $1.57 to align with Street research that points to improving revenue growth assumptions, a slightly lower discount rate and a higher future P/E. This is supported by analysts highlighting moderating delivery declines, steadier Security trends, accelerating compute growth and potential benefits from AI infrastructure demand.

Analyst Commentary

Recent Street research on Akamai points to a cluster of upward price target revisions and one high profile rating upgrade, framed around expectations for steadier core trends and contribution from newer growth areas such as compute and AI infrastructure.

Bullish Takeaways

Bullish analysts are lifting price targets, reflecting higher assumed future P/E multiples and a view that the potential for improving growth is not fully reflected in the current share price.
Several researchers cite moderating declines in the legacy delivery business, which they see as easing a key drag on overall revenue growth and supporting a more constructive outlook on execution.
The Security segment is described as stable, giving bullish analysts more confidence that Akamai can maintain a consistent revenue base while investing in newer offerings.
Growth in compute and interest around AI infrastructure demand are recurring themes. Bulls argue that the company is positioned to participate in these areas as it evolves from a pure content delivery provider to a broader cloud infrastructure and security platform.

Bearish Takeaways

Even as targets move higher, some cautious analysts point out that expectations for an improvement in growth are already embedded in higher valuation multiples. This could limit upside if execution does not track these assumptions.
The thesis around moderating delivery declines still depends on that trend holding, so any renewed weakness in this legacy business could weigh on both revenue mix and investor confidence.
The shift toward a broader cloud infrastructure and security platform is described as being at an inflection point. This also means execution risk remains, especially if investment in compute and AI related infrastructure takes longer to translate into consistent growth.
In the short term, the presence of an upside 90 day catalyst watch underscores that catalysts are time bound. If they do not materialize as some expect, the shares could face pressure as expectations reset.

What's in the News

Akamai expanded its Security Certified Service Provider initiative through Deutsche Telekom Security, which is delivering managed API security and microsegmentation services for sectors such as finance, insurance, critical infrastructure, and the public sector, including a deployment for a major German state bank (Key Developments).
The company launched ISV Catalyst, a referral based partner program designed for independent software vendors to build, market, and sell solutions on Akamai’s cloud platform. Features include no referral fees in the first year, co marketing, and visibility through Akamai’s sales channels and partner directory (Key Developments).
Akamai announced a collaboration with Visa that combines Visa’s Trusted Agent Protocol with Akamai’s edge based behavioral intelligence to provide identity, authentication, and fraud controls for AI agents involved in commerce, aimed at helping merchants distinguish trusted agents from malicious bots (Key Developments).
Vindral became one of the first five partners in the ISV Catalyst program, combining its ultra low latency streaming stack with Akamai’s infrastructure to support use cases in sports, auctions, iGaming, and live events (Key Developments).
AccuWeather adopted a joint solution from Akamai and Zuplo that uses Akamai’s edge platform and Zuplo’s API gateway to manage, secure, and monetize its APIs, including a redesigned developer portal for access control, analytics, and revenue tracking (Key Developments).

Valuation Changes

Fair Value: The updated estimate has risen slightly from $101.16 to $102.72.
Discount Rate: The assumed rate has fallen slightly from 10.21% to 9.72%.
Revenue Growth: The long-term revenue growth assumption has risen slightly from 6.99% to 7.58%.
Net Profit Margin: The assumed net profit margin has edged down slightly from 17.27% to 17.00%.
Future P/E: The target future P/E multiple has risen moderately from 19.5x to 21.3x.

Surging demand for secure, low-latency cloud and edge infrastructure, driven by AI and cybersecurity needs, positions Akamai for continued top-line and margin growth through value-added solutions.
Strategic investments in security, compute, and disciplined capital allocation are expanding market reach and supporting sustainable improvements in shareholder returns.
Rising investment needs, customer concentration, and intensifying competition threaten profits and market share, while core CDN revenues decline amid industry commoditization.

Catalysts

About Akamai Technologies

Engages in the provision of security, delivery, and cloud computing solutions in the United States and internationally.What are the underlying business or industry changes driving this perspective?

Rampant growth in data consumption, driven by AI-powered applications, video, and real-time use cases, is creating strong demand for Akamai's cloud infrastructure and edge compute offerings; this is illustrated by accelerating CIS (Cloud Infrastructure Services) ARR (annual recurring revenue), with 40–45% growth targeted for year-end 2025, pointing to robust forward revenue acceleration as large signed deals start to contribute.
The proliferation of AI applications requiring secure, ultra-low-latency infrastructure benefits Akamai's globally distributed platform-evidenced by new AI Gateway and Firewall for AI offerings-which positions the company to capture new AI-driven workloads, supporting both future top-line growth and potentially higher net margins via value-added solutions.
Persistent escalation of cybersecurity threats and high-profile ransomware attacks are fueling enterprise demand for micro-segmentation and Zero Trust security, where Akamai claims market leadership and is seeing high double-digit ARR growth in these particular solutions, suggesting sustained momentum for security-driven revenue and margin expansion.
Akamai's continued investment and go-to-market transformation in security and compute, including expanded sales capacity and channel partnerships, should enable it to tap further into the expanding addressable market for cloud and edge security, likely contributing to both top-line growth and long-term earnings leverage as these businesses scale.
Active capital allocation through ongoing share repurchases and disciplined cash management supports EPS growth even at moderate revenue increases, enhancing shareholder returns and providing a structural tailwind for future per-share earnings.

Akamai Technologies Earnings and Revenue Growth

Akamai Technologies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Akamai Technologies's revenue will grow by 6.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 10.4% today to 15.7% in 3 years time.
Analysts expect earnings to reach $765.1 million (and earnings per share of $5.53) by about September 2028, up from $424.6 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $444.5 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.7x on those 2028 earnings, down from 26.4x today. This future PE is lower than the current PE for the US IT industry at 29.0x.
Analysts expect the number of shares outstanding to decline by 4.55% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 10.34%, as per the Simply Wall St company report.

Akamai Technologies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The delivery (CDN) segment, historically Akamai's core business, continues to face headwinds and is projected to decline at mid-single digits over the longer term, highlighting a maturing and potentially shrinking revenue source due to ongoing industry commoditization and competition, which could limit topline revenue growth.
Increasing capital expenditures (CapEx) and investments required to expand compute capacity and support large new contracts-especially in cloud and edge computing-may suppress net margins and profitability if the new offerings don't achieve sufficient scale or if customer ramp-up is slower than projected; management acknowledged operating margin is expected to decrease in the second half as these investments ramp.
The company's compute revenue and projected acceleration in cloud infrastructure services growth remain heavily dependent on a small number of large contracts, with actual revenue realization subject to client application migration schedules beyond Akamai's control; this customer concentration risk introduces potential volatility in future earnings and cash flows.
Margin pressures may increase as partner-sourced compute solutions grow; Akamai expects increased sales from qualified compute partner (QCP) solutions to drag on overall gross margin due to structurally lower partner margins, which could erode earnings quality even if revenue grows.
Intensifying industry competition from hyperscale cloud providers, ongoing migration of enterprise workloads to integrated cloud/CDN/security stacks at Amazon, Microsoft, and Google, and the possibility of technology shifts (e.g., decentralized architectures or network infrastructure advances) may erode Akamai's market share and pricing power over the long term, pressuring both revenue and profit growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $95.205 for Akamai Technologies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $133.0, and the most bearish reporting a price target of just $66.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.9 billion, earnings will come to $765.1 million, and it would be trading on a PE ratio of 20.7x, assuming you use a discount rate of 10.3%.
Given the current share price of $78.16, the analyst price target of $95.2 is 17.9% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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