AKAM · Akamai Technologies
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $99.59
Note written ·
Price against the kill line
14.2% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $99.59, on record since 11 November 2026. The shares are down 30.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $99.59, the 27 October 2026 close and just under the 50-day average, which would show the shares leading the S&P 500 again. Fourth-quarter revenue above the $1,170 million top of the guide, or a raised 2027 cloud revenue range, would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Industrials
Quarter to 30 September 2026, filed 6 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 1,122
- Revenue, change on a year (%)
- +6.4
- Gross margin (%)
- 55.0
- Operating margin (%)
- 9.7
- Free cash flow, four quarters ($M)
- 545
- Net cash, cash less debt ($M)
- −4,048
- Price to earnings (×)
- 31.8
- Enterprise value to sales (×)
- 3.7
All filed numbers
What Akamai Technologies reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 1,122 | +6.4 | 55.0 | 9.7 |
| first filed | 1,100 | +5.4 | 55.8 | 7.3 |
| first filed | 1,074 | +5.8 | 56.1 | 10.7 |
| first filed | 1,095 | +7.4 | 58.7 | 8.7 |
| first filed | 1,055 | +5.0 | 59.3 | 15.7 |
| first filed | 1,044 | +6.5 | 59.1 | 14.5 |
| Pre-tax income ($M) | 138 |
| Net income ($M) four quarters: 388 | 117 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +4.4 |
| Operating cash flow ($M) | 1,438 |
| Capital spending ($M) | 893 |
| Free cash flow ($M) | 545 |
| Cash and short-term investments ($M) | 3,519 |
| Debt ($M) convertible debt | 7,568 |
| Net cash, cash less debt ($M) | −4,048 |
| Deferred revenue ($M) +18.7% on a year | 220 |
| Backlog, orders not yet delivered ($M) +314.6% on a year | 19,900 |
| Receivables ($M) | 959 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 5,149 |
| Market value ($M) | 12,317 |
| Enterprise value, market value plus net debt ($M) | 16,366 |
| Enterprise value to sales (×) | 3.7 |
| Enterprise value to operating income (×) | 41.1 |
| Price to earnings (×) | 31.8 |
| Price to book value (×) | 2.4 |
| Free-cash-flow yield (%) | 4.4 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 13.0% of shares outstanding sold short, 3.7 days of average trading to cover, −2.8% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $2.6M | $1.5M |
| 12 monthsfrom | $2.6M | $16.5M |
This note mentions Anthropic, the company that makes Claude, the AI model that wrote it. The same method and sources apply as on every note. The conflict of interest, stated.
The thesis
Akamai Technologies' pivot from content delivery to AI cloud infrastructure now has a 2027 revenue outlook behind it, but the shares are more likely to lag the S&P 500 over three months. Margins fell in the third quarter, debt is rising to fund the build, and Evercore ISI cut its rating on the shares to In Line in analyst alerts dated 11 November 2026. The fourth-quarter spending ramp and the fourth-quarter report, expected around February 2027, settle whether the outlook holds.
The shares closed at $86.56 on 12 November 2026, 47.7% below the 52-week high of $165.45 reached intraday on 13 May 2026. The 3-month change is –30.7%. The 52-week closing low is $77.84, set on 5 November 2026, the day of the third-quarter report.
The report showed revenue of $1.122 billion, up 6% from a year earlier, and Cloud Infrastructure Services revenue of $109 million, up 34% (Akamai 8-K, 5 November 2026). Non-GAAP (adjusted) operating margin fell 6 percentage points to 25%. Management gave a 2027 cloud revenue range of $1.1 billion to $1.3 billion and said 2028 total revenue should exceed $7.0 billion.
The market has not accepted that outlook. The shares closed at $99.59 on 27 October 2026 and sit $13.03 below that close after the report, the target cuts and the convertible financing.
Bullish and bearish views on Akamai Technologies, Inc.
The bull case on Akamai Technologies, Inc. (AKAM), in brief: large contracted growth outlook. The bear case: margins are falling as spending rises.
Bull case
- Large contracted growth outlook. Akamai guides 2027 Cloud Infrastructure Services revenue to $1.1 billion to $1.3 billion and total revenue growth of 17% to 22%, currency-adjusted (third-quarter 2026 release, 5 November 2026). Chief executive Tom Leighton cited more than $14 billion of multi-year commitments signed in 2026.
- Cloud revenue keeps growing. Cloud Infrastructure Services revenue rose 34% to $109 million in the third quarter. Security revenue rose 9% to $622 million (third-quarter 2026 release, 5 November 2026).
- Some analysts still see large upside. KeyBanc kept Overweight with a $175 target and TD Cowen raised its target to $167 from $149 (analyst alerts, 6 November 2026). HSBC maintained its Buy rating (analyst alert, 10 November 2026). Both targets sit far above the $86.56 close.
- Financing extends the runway. Akamai closed a $2.5 billion convertible senior notes offering on 12 November 2026 (company news). The 9 November 2026 proposal announcement said proceeds would partly repay the $1.15 billion of 0.375% notes due 2027 and fund cloud capital expenditure.
Bear case
- Margins are falling as spending rises. Third-quarter capital expenditure was $464 million, 41% of revenue, against $1,017 million for the nine months (third-quarter 2026 release). Non-GAAP earnings per share were $1.77, down 5%, and the fourth-quarter operating margin is guided to 24%.
- Evercore sees no near-term lift. Evercore ISI analyst Peter Levine cut Akamai to In Line from Outperform and lowered the target to $90 from $150 (analyst alerts, 11 November 2026). Evercore expects the shares to trade roughly sideways until the third or fourth quarter of 2027, and names stabilising margins, rising Anthropic revenue and a path to positive free cash flow as the turning points.
- Guidance fell short of expectations. Fourth-quarter non-GAAP earnings per share are guided to $1.50 to $1.70, against $1.78 expected by the market, per Evercore's note as reported on 10 November 2026.
- Targets sit near the price. UBS cut to $90 (Neutral), RBC to $85 (Sector Perform), Susquehanna to $90 (Positive) and Baird to $92 (Neutral) (analyst alerts, 6 November 2026 and 9 November 2026).
- Dilution and leverage are building. The new 1.00% convertible notes carry conversion prices of $112.41 and $102.37 (company news, 10 November 2026). Anthropic's warrant exercise price is $111.33. Akamai amended its credit agreement on 9 November 2026 to adjust leverage covenants.
- Delivery revenue is shrinking. Delivery and other cloud applications revenue was $391 million, down 3% (results coverage, 5 November 2026).
Price setup
The shares closed at $86.56 on 12 November 2026, after $77.84 on 5 November 2026, $83.09 on 6 November 2026, $80.29 on 9 November 2026, $83.71 on 10 November 2026 and $86.68 on 11 November 2026. The shares have recovered from the closing low but remain below both long averages.
The 50-day average close is $99.74 and the 200-day average close is $112.03, both as of 12 November 2026. The $99.59 close of 27 October 2026 sits just under the 50-day average. Together these form the overhead range the shares have to clear to show leadership.
The convertible notes' conversion prices of $102.37 and $112.41 and the Anthropic warrant at $111.33 all lie above the last close. Analyst targets from RBC at $85 to Baird at $92 bracket the price.
Catalysts ahead
- Q4 2026: Start of the Anthropic-related hardware and data-center spending ramp. Spending precedes contract revenue, so power, memory and data-center availability are tested first.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. First check on whether the 24% fourth-quarter margin guide, the $1,145 million to $1,170 million revenue guide and the 2027 cloud revenue range of $1.1 billion to $1.3 billion hold.
What would change the view
A daily close above $99.59, the 27 October 2026 close and just under the 50-day average, which would show the shares leading the S&P 500 again. Fourth-quarter revenue above the $1,170 million top of the guide, or a raised 2027 cloud revenue range, would also show the shares leading.
What it trades with
Akamai trades with AI-infrastructure builders on the cloud side, because the Anthropic build depends on power, memory and data-center space. Its security business, up 9% in the third quarter, links it to Cybersecurity software names. The older delivery business, down 3%, ties it to internet traffic and media demand.
Convertible issuance and hedging can move the shares independently of the sector. The number of post-earnings sessions since 5 November 2026 is too small to draw a conclusion about how the shares respond now that the offering has closed.
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $1.122 billion, up 6% from a year earlier; security revenue was $622 million, up 9%; Cloud Infrastructure Services revenue was $109 million, up 34%. Akamai third-quarter 2026 earnings release (8-K exhibit 99.1) · as of
- Non-GAAP operating margin was 25%, down 6 percentage points from a year earlier; non-GAAP earnings per share were $1.77, down 5%. Akamai third-quarter 2026 earnings release (8-K exhibit 99.1) · as of
- Capital expenditure was $464 million in the third quarter (41% of revenue) and $1,017 million for the nine months (31% of revenue). Akamai third-quarter 2026 earnings release (8-K exhibit 99.1) · as of
- Fourth-quarter guidance: revenue $1,145 million to $1,170 million, non-GAAP operating margin 24%, non-GAAP earnings per share $1.50 to $1.70. Full-year 2026 non-GAAP earnings per share guidance is $6.47 to $6.68. Akamai third-quarter 2026 earnings release (8-K exhibit 99.1) · as of
- 2027 outlook: Cloud Infrastructure Services revenue of $1.1 billion to $1.3 billion and total revenue growth of 17% to 22% (currency-adjusted); 2028 total revenue above $7.0 billion. More than $14 billion of multi-year commitments signed in 2026. Akamai third-quarter 2026 earnings release (8-K exhibit 99.1) · as of
- Akamai priced $1.1 billion each of 1.00% convertible senior notes due 2028 and 2031, with conversion prices of $112.41 and $102.37 per share, and closed a $2.5 billion convertible senior notes offering on 12 November 2026. Company news, pricing and closing announcements · as of
- Evercore ISI cut Akamai to In Line from Outperform and lowered its target to $90 from $150; UBS, RBC, Susquehanna and Baird set targets of $90, $85, $90 and $92. Analyst alert headlines; Goldesel report on Evercore note · as of
- Closing price $86.56 on 12 November 2026; 50-day average $99.74; 200-day average $112.03; 52-week closing low $77.84 on 5 November 2026. Split/dividend-adjusted daily closes · as of
Sources
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