Akamai Technologies, Inc. (AKAM) | The Buildout — AI Infrastructure
The Verdict
Akamai is an infrastructure provider for the AI-driven economy, combining distributed compute, security, and delivery. It operates a global edge platform that takes AI inference, agentic workloads, and security controls close to users and data, rather than competing for frontier model training. That positioning matters because the business is converting its existing distributed network into committed cloud infrastructure contracts and AI-driven security demand.
| Market Cap | — |
| Revenue (TTM) | $4.3B |
| Revenue Growth | +6.2% |
| EBITDA Margin (TTM) | 30.5% |
| Net Debt | $4.9B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- More than $2.8B of multiyear CIS commitments signed in 2026, including a $1.8B seven-year frontier-model deal described as the largest in company history.
- CIS revenue reached $99M in Q2 2026, up 39% year over year, after $95M in Q1; FY2026 growth is guided to at least 50% cc.
- GPU capacity is completely sold out, customers are preordering capacity, and an additional NVIDIA RTX Pro 6000 order is being placed.
- Security revenue was $604M in Q2 2026, up 10% reported, and is expected to exceed $2.4B in 2026.
- Akamai operates 4,300 locations across 700 cities and 130 countries, with one of the world's largest backbones.
What We’re Watching
- Q4 2026 CIS ramp: management expects about $20–25M from the $1.8B deal, and the $200M deal also begins revenue in Q4.
- Q3 2026 CapEx guidance of $475–525M tests whether slipped GPU shipments arrived and the buildout is back on schedule.
- Large CIS contracts carry non-GAAP operating margins in the low-20s to low-30s after depreciation, below the historical company mix.
- RPO visibility: the Q1 10-Q showed $5.5B of remaining performance obligations, but the Q2 call did not provide an updated figure.
The thesis is strengthening on committed demand but not yet proven on the income statement. Management has upgraded 2027 total revenue growth to low teens and says GPU capacity is sold out, yet Q2 total revenue grew only 5% and non-GAAP operating margin fell to 25%. The open question is whether Q4 2026 CIS revenue and the 2027 ramp convert signed commitments into recognized revenue on schedule.
Earnings Beat
Akamai reported Q2 2026 revenue of $1.1B, up 5% year over year. Security was $604M, up 10% reported; Cloud Infrastructure Services was $99M, up 39%; and Delivery and other cloud applications was $396M, down 6%. Non-GAAP operating margin was 25%, and Q2 CapEx was $347M, below guidance because GPU receipts slipped past quarter-end.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.1B | $1.1B | $1.0B | +5.8% |
| Gross margin | 56.1% | 54.6% | 58.7% | -260bps |
| EBITDA | $298M | $334M | $329M | −9.3% |
| EPS | $0.71 | $0.58 | $0.82 | −13.1% |
| Cloud Infrastructure Services revenue | $99M | $95M | n/a | +39% YoY |
| Security revenue | $604M | $590M | n/a | +10% reported / +9% cc |
we now anticipate that Akamai’s overall revenue growth will accelerate into the low teens in 2027.— Tom Leighton, CEO, August 6, 2026
Management tone: Management's tone shifted from confident-building to explicit demand language. The CFO provided voluntary detail on large-contract economics, and management stated GPU capacity is completely sold out, customers are preordering capacity, and buybacks were paused to fund CIS growth. Management was guarded mainly where NDA limits applied, such as the identity and architecture of the largest CIS customer.
Management Guidance
For FY2026, management guides revenue of $4.445B–$4.530B, up 6–8% reported or 5–7% cc. CIS growth is guided to at least 50% cc; security growth to high single digits cc; and delivery and other cloud apps to a mid-single-digit decline cc. Non-GAAP operating margin is guided to 25–26%, non-GAAP EPS to $6.40–$7.05, and CapEx to approximately 40% of revenue. For Q3 2026, revenue guidance is $1.105B–$1.130B, up 5–7%, with non-GAAP EPS of $1.60–$1.80 and CapEx of $475M–$525M.
Trajectory
Reported revenue is stable at a mid-single-digit pace: Q1 FY2026 grew 6% reported or 4% cc, and Q2 grew 5% in both. Underneath, Cloud Infrastructure Services is the growth engine, Security is steady at high single digits, and Delivery is shrinking as expected. Margins are compressing because colocation, depreciation, and headcount costs are running ahead of CIS revenue: Q1 gross margin was 56.1% versus 58.7% a year earlier, and non-GAAP operating margin moved from 29% in Q4 2025 to 25% in Q2 2026.
The Model
The model projects FY+1 revenue of $4,540M and EBITDA of $1,271M, a 28.0% margin. For FY+2, the model projects revenue of $5,170M and EBITDA of $1,499M, a 29.0% margin. The near term is anchored by the FY2026 revenue guide of $4.445B–$4.530B and the Q4 2026 start of the large CIS commitments; FY+2 is driven by the 2027 low-teens total revenue growth pathway as the robotics and frontier-model contracts ramp.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $4.2B | $4.5B | $5.2B |
| YoY Growth | — | +7.9% | +13.9% |
| EBITDA | $1.3B | $1.3B | $1.5B |
| EBITDA Margin | 31.7% | 28.0% | 29.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.0% above analyst consensus.
For FY2026, management guides revenue of $4.445B–$4.530B, up 6–8% reported or 5–7% cc. CIS growth is guided to at least 50% cc; security growth to high single digits cc; and delivery and other cloud apps to a mid-single-digit decline cc. Non-GAAP operating margin is guided to 25–26%, non-GAAP EPS to $6.40–$7.05, and CapEx to approximately 40% of revenue. For Q3 2026, revenue guidance is $1.105B–$1.130B, up 5–7%, with non-GAAP EPS of $1.60–$1.80 and CapEx of $475M–$525M.
What Could Go Right — and Wrong
- Q4 2026 CIS revenue arrives at or above the guided $20–25M from the $1.8B deal, and the 2027 ramp continues on schedule.
- One or more additional large take-or-pay CIS contracts extend the committed order book beyond $2.8B.
- Edge-inference adoption broadens beyond the three disclosed anchor deals into smaller, repeatable, usage-based CIS revenue.
- Security growth re-accelerates above high single digits as AI-driven threat demand translates into measured revenue.
- Disclosed contract economics hold: cash gross margins mid-60s to mid-70s and operating margins low-20s to low-30s after depreciation.
- GPU, memory, or data-center availability delays push Q4 2026 and 2027 ramp revenue out.
- An anchor CIS customer delays, renegotiates, or terminates its take-or-pay commitment.
- Large contracts come in at the low end of the disclosed margin range, leaving structurally lower profitability.
- Delivery decline worsens or security growth stalls, keeping total growth nearer mid-single digits instead of low teens.
- Hyperscalers and neo-clouds compete more aggressively on inference pricing, eroding the cost-performance advantage Akamai is winning on.
Looking Ahead
The next twelve months turn on converting signed contracts into reported revenue. Management points to Q3 CapEx stepping to $475–525M, Q4 2026 revenue from the large CIS contracts, additional NVIDIA GPU orders, and 2027 revenue acceleration to low teens. The Q1 10-Q already showed $5.5B of remaining performance obligations; the next updates will show whether the large CIS commitments are building that balance.
- Q3 2026CapEx step-up — Q3 CapEx guide of $475–525M tests whether slipped GPU shipments arrived.
- Q4 2026Large CIS revenue start — Largest CIS deal expected at $20–25M; $200M deal also begins Q4 revenue.
- FY2026CIS full-year growth — Tests the at-least-50% cc growth target for Cloud Infrastructure Services.
- 2027Total revenue acceleration — Tests the 2027 low-teens growth guidance as anchor contracts ramp.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $4.0B | $4.2B | $4.3B | +5.4% |
| Gross Margin | 59.4% | 57.9% | 57.2% | 148bps |
| EBITDA | $1.2B | $1.3B | $10.8B | +12.7% |
| EBITDA Margin | 29.6% | 31.7% | 30.5% | +204bps |
| Net Income | $505M | $452M | $435M | -10.5% |
| Free Cash Flow | $834M | $699M | $6.4B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)57.2%
- EBITDA Margin (TTM)30.5%
- Net Margin (TTM)10.2%
- ROIC4.7%
- FCF Conversion58.8%
- SBC / Revenue11.2%
The Company
Akamai Technologies is repositioning from its legacy identity as the world's largest CDN and edge provider toward becoming an infrastructure provider for the AI-driven economy. It bundles compute, security, and delivery: Cloud Infrastructure Services includes compute, storage, networking, EdgeWorkers, the Akamai App Platform, Inference Cloud, and GPU-based AI inference; Security includes WAF, API security, Guardicore segmentation, ZTNA, DNS security, bot management, DDoS protection, and Firewall for AI; Delivery and other cloud applications is the legacy CDN and media delivery business.
Akamai operates a distributed platform across 4,300 locations, 700 cities, and 130 countries, with one of the world's largest backbones. It runs full-stack compute from functions-as-a-service in all locations, managed containers in well over 100 cities, full IaaS in several dozen cities, and GPUs in a couple dozen cities. Its headquarters are in Cambridge, Massachusetts, with other large offices in Bangalore, Krakow, and Tel Aviv.
Business Segments
Competitive Landscape
Akamai's competitive dynamic is defined by hyperscalers and neo-clouds in cloud infrastructure, and by CDN and security vendors in its other categories. Management says Akamai is not competing for frontier model training; it is competing for AI inference, robotics, agents, and latency-sensitive workloads. Its stated differentiators are the distributed 700-city footprint, backbone, egress cost advantage, and combined compute-security-delivery platform.
- AWS, Azure, Google CloudNamed as primary CIS competition; management says it is not competing for frontier model training but has won specific inference workloads against hyperscalers.
- Named as a neo-cloud competitor in the intel file's product map; not discussed in detail in primary filings or calls.
- Named as a neo-cloud competitor in the intel file's product map; not discussed further in primary material.
- CloudflareNamed as a CDN/edge and security competitor in the intel file; Akamai's differentiation focuses on distribution, backbone, and combined platform.
- FastlyNamed as a CDN/edge competitor in the intel file; not discussed in detail in the primary calls.
Supply Chain
Akamai sits between GPU and data-center capacity and a broad base of enterprise and AI-inference customers. NVIDIA is the one verified GPU supplier named in primary material; data-center landlords are not disclosed.
More on AKAM: Earnings recap