Akamai Technologies (AKAM): Evaluating Valuation Following New Aptum Cloud Partnership and Service Expansion

Akamai Technologies (AKAM) just unveiled a fresh partnership with Aptum that is already turning heads across the cloud services landscape. This move brings Aptum into the Akamai Partner Program, allowing them to offer specialized services from day one for customers using Akamai Cloud. For businesses wrestling with cloud migration and looking to build or scale cloud native applications, the joint expertise is being touted as a way to simplify transitions and control costs. This combination could matter for both mid-market and enterprise clients navigating digital transformation.

The announcement comes at an interesting time for Akamai Technologies. Despite continued annual growth in both revenue and net income, the company’s stock is down 23% over the past year and has slipped nearly 19% this year alone. Recent trading has been relatively flat, hinting that the market is still cautious and momentum hasn’t quite bounced back. Nevertheless, Akamai’s push into deeper cloud integration through strategic partners like Aptum points to a focus on laying groundwork for future growth, even as its share price lags recent highs.

So with shares still trading at a sizable discount to some valuation models, should investors see hidden upside in this new cloud partnership, or is the market already bracing for what comes next?

Most Popular Narrative: 18.6% Undervalued

According to community narrative, Akamai Technologies is currently priced well below its estimated fair value, reflecting optimism about future earnings growth and strategic positioning in the cloud, security, and AI sectors.

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 to 45% growth targeted for year-end 2025. This points to robust forward revenue acceleration as large signed deals start to contribute.

Curious about the bold growth assumptions fueling this attractive discount? There is a specific path to higher valuations, built on expanding margins and transformative revenue growth. Wonder how the underlying financial levers stack up for Akamai against analyst expectations? The numbers behind this fair value might surprise you. Ready to uncover the ingredients driving this undervaluation?

Result: Fair Value of $95.41 (UNDERVALUED)

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

However, persistent declines in Akamai's core CDN business and margin pressures from rising investments could challenge these bullish expectations in the future.

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

Another View: The SWS DCF Model

Taking a different approach, our SWS DCF model also points to shares being undervalued based on long-term cash flow projections. Does this reinforce the fair value case, or could the assumptions hiding inside each model lead to very different outcomes?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Akamai Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Akamai Technologies Narrative

If you prefer a different perspective or want to dig into the numbers firsthand, you can quickly shape your own viewpoint and narrative by using 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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