Akamai Technologies Headquarters and Trademark Logo
Akamai Technologies (AKAM) investors just received a more cautious signal from Wall Street. HSBC downgraded the stock from “Buy” to “Hold” and slashed its price target from $171 to $123, pointing to concerns about weaker-than-expected cloud infrastructure margins, slower earnings growth and elevated capital spending.
Akamai’s Q2 revenue rose to $1.1 billion, but non-GAAP operating profit fell short of HSBC’s estimate, while operating margin declined to 25% and EPS dropped 8% to $1.59.
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Although HSBC expects strong artificial intelligence (AI)-driven demand to fuel rapid cloud infrastructure growth, it now forecasts lower margins and 8.5% annual EPS growth through 2028, below the sector’s 10%-15% range. The bank also expects capex to average 36% of revenue through 2028, prompting it to reduce Akamai’s valuation multiple to 17x estimated near-term non-GAAP EPS from 25x.
With the stock’s AI-driven growth story facing tougher expectations, it’s worth weighing whether Akamai’s long-term opportunity can justify the near-term pressure on profitability.
About Akamai Stock
Akamai Technologies is a cloud computing and cybersecurity company best known for its global content delivery network (CDN), edge computing infrastructure, and internet security solutions. Founded in 1998 and headquartered in Cambridge, Massachusetts, the company serves enterprises worldwide with services spanning cloud infrastructure, API security, DDoS protection, and AI-ready edge computing platforms.
Once viewed primarily as a legacy internet infrastructure provider, Akamai is increasingly repositioning itself as a next-generation AI and cloud infrastructure player following major investments in distributed computing and large-scale AI workloads. The company currently has a market cap of $16.8 billion.
AKAM stock has delivered a strong overall return over the past year, but the stock has recently lost some momentum. From…
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