Akamai Technologies, Inc. (AKAM) | The Buildout — AI Infrastructure

The Verdict

Akamai sells security, compute and delivery services off a distributed edge platform, and it is now selling GPU capacity from that same footprint. It does not make chips, and management says it does not train frontier models; it rents reserved inference capacity and protects the applications and agents that use it. That places Akamai downstream of the buildout — a layer enterprises reach for when inference needs to run close to the user, or when their own AI systems need defending.

Earnings Beat

Q2 FY2026 revenue was $1.1 billion, up 5% year over year as reported and in constant currency, with gross margin of 55.8%. The standout was a new commitment: a US-based technology company signed more than $600 million over four years for cloud infrastructure capacity to power robotics development, taking year-to-date multiyear CIS commitments above $2.8 billion. Cloud Infrastructure Services revenue was $99 million, up 39%, and security was $604 million, up 10%, against delivery at $396 million, down 6%.

Management tone: Q1 FY2026 was promotional — the CEO called it 'a definitive turning point in the growth and evolution of our business.' Q2 FY2026 stayed bullish but shifted from announcing a deal to committing capital and defending the ramp: the 2027 outlook was raised to 'low teens' while near-term margin, EPS and FX expectations were trimmed. Management volunteered the Q3 CIS flat spot and a ramp-related margin dip, and the CEO pointed investors to third-party articles and blogs on the call.

Management Guidance

For FY2026, Akamai guides revenue of $4.445 billion–$4.530 billion, up 6%–8% reported and 5%–7% constant currency; CIS growth of at least 50% cc; security growth in the high single digits cc; and a mid-single-digit cc decline in delivery and other cloud applications. Non-GAAP operating margin is guided to roughly 25%–26%, down from about 26%, and capital spending to about 40% of revenue. Non-GAAP EPS is guided to $6.40–$7.05 on assumptions of about a 19% tax rate and about 150 million diluted shares. FX is assumed to be a $9 million tailwind, cut from $20 million, with a $9 million second-half headwind. For Q3 FY2026, revenue is guided to $1.105 billion–$1.130 billion, non-GAAP operating margin to 24%–26%, and CapEx to $475 million–$525 million, or 43%–46% of revenue. For 2027, management guides total-company growth to 'low teens.'

Trajectory

Total revenue has been steady: $1,073.6 million in Q1 FY2026 and $1,099.7 million in Q2 FY2026, with reported growth moving from 6% to 5% year over year. Underneath, the mix is shifting. Security printed $604 million, up 10%; delivery $396 million, down 6%; and CIS $99 million, up 39%, a sequential step of about $4 million off Q1's $94.6 million. Gross margin moved from 56.1% to 55.8% across the two quarters, against 58.7% and 59.1% in the year-earlier periods. The stated cause is cost, not price: co-location, depreciation of network equipment, network build-out and payroll all rose as the company built out compute. A declining, high-margin delivery business is funding a growing, lower-margin, capital-heavy one.

The Model

The model projects FY+1 revenue of $4,500 million with EBITDA of $1,143 million, a 25.4% margin. For FY+2 it projects revenue of $5,080 million and EBITDA of $1,336 million, a 26.3% margin. The near term is anchored on signings already in hand: more than $2.8 billion of multiyear CIS commitments, a Q4 step-up management has guided to, and capital spending guided near 40% of revenue. FY+2 depends on those ramps continuing through 2027 — the year management says total-company growth accelerates into the 'low teens' — and on large-contract margins landing in the low-20s-to-low-30s band once the roughly one-quarter ramp dip passes.

Projections are the median of 5 independent model runs. The model’s revenue sits 2.1% above analyst consensus.

For FY2026, Akamai guides revenue of $4.445 billion–$4.530 billion, up 6%–8% reported and 5%–7% constant currency; CIS growth of at least 50% cc; security growth in the high single digits cc; and a mid-single-digit cc decline in delivery and other cloud applications. Non-GAAP operating margin is guided to roughly 25%–26%, down from about 26%, and capital spending to about 40% of revenue. Non-GAAP EPS is guided to $6.40–$7.05 on assumptions of about a 19% tax rate and about 150 million diluted shares. FX is assumed to be a $9 million tailwind, cut from $20 million, with a $9 million second-half headwind. For Q3 FY2026, revenue is guided to $1.105 billion–$1.130 billion, non-GAAP operating margin to 24%–26%, and CapEx to $475 million–$525 million, or 43%–46% of revenue. For 2027, management guides total-company growth to 'low teens.'

What Could Go Right — and Wrong

Looking Ahead

The next twelve months turn on whether committed deals become reported revenue. Management guides CIS to at least 50% constant-currency growth for FY2026 while saying Q3 will not accelerate, which puts the year on a Q4 step-up, and the Q4 print should carry the first revenue from the $1.8 billion and $200 million commitments. The company is spending about 40% of revenue on capital, has paused buybacks, and has raised roughly $3–3.5 billion in convertible notes, so funding is settled for now. The remaining performance obligation disclosure is the cleanest check on whether the commitments are contractual obligations.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Akamai sells security, compute and delivery services, and the FY2025 10-K adds AI infrastructure services to that list. Security is the largest line, guided to more than $2.4 billion in FY2026, which management says makes Akamai 'one of the largest security providers in the market.' Cloud Infrastructure Services is the AI line: GPU capacity on NVIDIA RTX Pro 6000 hardware, distributed inference, functions-as-a-service and managed containers, sold as reserved multiyear capacity or on demand per token or per VM hour. Delivery is the legacy business, roughly 36% of revenue and declining. Management says the platform reaches 4,300 locations across 700 cities and 130 countries.

Akamai does not own a fab or make chips. It runs a distributed edge platform and buys the rest — GPUs from NVIDIA and colocation from third parties, which the 10-Q names as the gating input. Headquarters is a lease in Cambridge, Massachusetts of roughly 659,000 square feet, about 285,000 of it subleased to third parties; other large offices are in Bangalore, Krakow and Tel Aviv, and about 6% of global employees are in Israel.

Business Segments

Competitive Landscape

Management frames cloud infrastructure competition plainly: "we do compete with the hyperscalers and the neo-clouds with our cloud infrastructure services. That is the primary competition." The 10-Q says Akamai faces intense competition across its markets, with pricing pressure and possible customer loss, and that competitive and pricing pressure has affected and may continue to affect security revenue, including at contract renewals. Management argues differentiation on distributed footprint, latency, egress cost and reliability, and cites a CrowdStrike switch away from an SMB-focused competitor as validation.

Supply Chain

Akamai sits downstream in the chain: it buys GPUs from NVIDIA and colocation from third parties, then sells security, compute and delivery capacity to enterprises off its own distributed platform. None of the supplied neighbor transcripts names Akamai directly.