Akamai Technologies (AKAM): Evaluating Valuation After Strong Q3 Growth, Updated Guidance, and AI Partnership with NVIDIA

Akamai Technologies (AKAM) just reported strong third quarter earnings growth and shared updated revenue guidance for both the upcoming quarter and the full year. In addition, the company announced its new Inference Cloud platform in partnership with NVIDIA.

See our latest analysis for Akamai Technologies.

Despite the upbeat earnings and Akamai’s ambitious new AI initiative with NVIDIA, the stock’s momentum has cooled this year. Akamai Technologies currently trades at $73.00, and the total shareholder return over the past year is down 30.1%, reflecting fading momentum even as the company continues to grow revenue and earnings.

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With Akamai’s shares still well below their analyst price target despite recent financial and strategic advances, investors are left to ponder whether the current valuation reflects an overlooked buying opportunity or if markets are already factoring in future growth.

Most Popular Narrative: 23.3% Undervalued

With Akamai Technologies’ last close at $73.00 and the most-followed narrative placing fair value at $95.20, the narrative case sees shares trading well below what future growth could justify. Market participants are weighing whether expectations for cloud, AI, and cybersecurity are set to unlock the kind of upside that justifies a much higher price.

The proliferation of AI applications requiring secure, ultra-low-latency infrastructure benefits Akamai's globally distributed platform. This is evidenced by new AI Gateway and Firewall for AI offerings, which position the company to capture new AI-driven workloads. These developments support both future top-line growth and potentially higher net margins through value-added solutions.

Read the complete narrative.

What’s the secret sauce behind this discounted price? The narrative is built on a head-turning set of sales and profit forecasts, and an ambitious shift in business mix. Curious about the surprising driver turbocharging that fair value? Click through to see what the consensus is really projecting.

Result: Fair Value of $95.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent weakness in core delivery revenues and heavy reliance on large contracts in cloud and compute could undermine bullish long-term projections.

Find out about the key risks to this Akamai Technologies narrative.

Build Your Own Akamai Technologies Narrative

If you want to dig into the numbers yourself or craft a different perspective, you can get started on your own narrative in just a few minutes: Do it your way.

A great starting point for your Akamai Technologies research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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