Akamai (AKAM) AI Stock Analysis

• Market Cap: $10.77B
• Dividend Yield: N/A
• Average Volume (3M): 2.88M
• Price to Earnings (P/E): 22.6
• Beta (1Y): 0.73
• Revenue Growth: 4.70%
• EPS Growth: -7.33%
• Country: US
• Employees: 10,700
• Sector: Technology
• Sector Strength: 40
• Industry: Software - Infrastructure
• EPS (TTM): 3.26
• Shares Outstanding: 146,114,780
• 10 Day Avg. Volume: 1,653,527
• 30 Day Avg. Volume: 2,884,780
• PEG Ratio: 8.27
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.05
• Price to Cash Flow (P/CF): 8.90
• P/FCF Ratio: 8.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $100.80
• Price Target Upside: 36.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17

Akamai's strong growth in security and cloud segments and strategic improvements bolster its outlook despite current profitability pressures and technical weaknesses. The CEO's stock purchase signals confidence, enhancing investor sentiment. However, technical indicators suggest short-term bearish trends, and valuation metrics indicate fair pricing, balancing the overall score.

Positive Factors

Business Opportunity

AKAM has a significant opportunity ahead, particularly in security and compute, underpinned by its category-leading positioning in content distribution.

Product Performance

Akamai's API Security solution finished 2024 at $57M, which is a significant increase from almost zero last year.

Revenue Growth

Akamai is transitioning to high growth areas such as Cloud Infrastructure Services and API security, which are showing promise with significant growth in revenue and customer adoption.

Negative Factors

Competitive Challenges

Investor concern is compounded by execution challenges in the Security and Compute segments.

Guidance and Projections

The muted FY25 guidance of 3% growth versus a consensus of 7% implies that this year is likely a year of transition.

Market Sentiment

Shares have decreased by 17% since the 4Q24 earnings, indicating weak sentiment.

Akamai Business Overview & Revenue Model

Company Description

Akamai Technologies, Inc. provides cloud services for securing, delivering, and optimizing content and business applications over the internet in the United States and internationally. The company offers cloud solutions to keep infrastructure, websites, applications, application programming interfaces, and users safe from various cyberattacks and online threats while enhancing performance. It also provides web and mobile performance solutions to enable dynamic websites and applications; media delivery solutions, including video streaming and video player services, game and software delivery, broadcast operations, authoritative domain name system, resolution, and data and analytics; and edge compute solutions to enable developers to deploy and distribute code at the edge. In addition, the company offers carrier offerings, including cybersecurity protection, parental controls, DNS infrastructure and content delivery solutions; and an array of service and support to assist customers with integrating, configuring, optimizing, and managing its offerings. It sells its solutions through direct sales and service organizations, as well as through various channel partners. Akamai Technologies, Inc. was incorporated in 1998 and is headquartered in Cambridge, Massachusetts.

How the Company Makes Money

Akamai makes money primarily through the sale of its CDN services, security solutions, and cloud services. The CDN services help businesses distribute their digital content efficiently and reliably, which is a major revenue driver. Akamai also generates significant income from its cybersecurity offerings, which include web application firewalls, bot management, and threat intelligence services, designed to protect clients from cyber threats. Furthermore, the company's cloud solutions, which enable businesses to enhance their online applications and infrastructure, contribute to its revenue. Akamai's strategic partnerships with major technology companies and its extensive network infrastructure are critical factors that bolster its earnings by expanding its customer base and service capabilities.

Akamai Financial Statement Overview

Summary

Akamai has consistent revenue growth and solid operational efficiency with a healthy gross profit margin. However, a decline in net income affects the net profit margin, and ROE has decreased, indicating pressure on profitability.

Income Statement

Akamai has demonstrated consistent revenue growth with a healthy gross profit margin of 57.5% in TTM. However, there is a decline in net income affecting the net profit margin, currently at 12.6%. The EBIT and EBITDA margins are solid at 13.5% and 26.9% respectively, indicating strong operational efficiency, although there is a noticeable drop in EBIT margin from the previous year.

Balance Sheet

The company's balance sheet shows a stable equity ratio of 47.0%, suggesting a balanced approach to financing. The debt-to-equity ratio is manageable at 0.95, showing prudent leverage usage. However, the return on equity (ROE) has decreased to 10.4%, indicating a lower profitability on shareholder equity compared to previous years.

Cash Flow

Akamai's cash flow is robust with a strong operating cash flow to net income ratio of 3.01, indicating excellent cash conversion from operations. Free cash flow has grown by 34.8% in the TTM, which is a significant improvement. The free cash flow to net income ratio is also healthy at 1.65, reflecting good cash generation relative to net income.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
3.99B	3.81B	3.62B	3.46B	3.20B
	Gross Profit
2.37B	2.30B	2.23B	2.19B	2.07B
	EBIT
533.41M	637.34M	676.27M	783.15M	658.53M
	EBITDA
1.26B	1.24B	1.26B	1.35B	1.16B
	Net Income Common Stockholders
504.92M	547.63M	523.67M	651.64M	557.05M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.60B	864.44M	1.11B	1.08B	1.10B
	Total Assets
10.37B	9.90B	8.30B	8.14B	7.76B
	Total Debt
4.63B	4.54B	3.17B	2.86B	2.78B
	Net Debt
4.12B	4.05B	2.63B	2.32B	2.42B
	Total Liabilities
5.49B	5.30B	3.94B	3.61B	3.51B
	Stockholders Equity
4.88B	4.60B	4.36B	4.53B	4.25B
Cash Flow		Free Cash Flow
833.90M	618.40M	816.37M	859.33M	483.13M
	Operating Cash Flow
1.52B	1.35B	1.27B	1.40B	1.22B
	Investing Cash Flow
-798.68M	-1.85B	-622.31M	-646.90M	-1.04B
	Financing Cash Flow
-679.63M	443.38M	-634.18M	-562.00M	-223.64M

Akamai Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 73.69
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AKAM, the sentiment is Negative. The current price of 73.69 is below the 20-day moving average (MA) of 80.83, below the 50-day MA of 88.06, and below the 200-day MA of 94.63, indicating a bearish trend. The MACD of -1.92 indicates Negative momentum. The RSI at 41.52 is Neutral, neither overbought nor oversold. The STOCH value of 35.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AKAM.

Akamai Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FFIV	79 Outperform	$13.79B	23.80	19.51%	―	3.02%	31.36%
ZS	73 Outperform	$27.03B	―	-1.21%	―	27.77%	89.39%
FTNT	70 Outperform	$65.14B	37.48	338.74%	―	12.27%	54.69%
AKAM	67 Neutral	$10.77B	22.58	10.66%	―	4.70%	-7.33%
GDDY	66 Neutral	$23.24B	25.48	248.42%	―	7.82%	-32.24%
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%
NET	55 Neutral	$33.50B	―	-8.71%	―	28.76%	58.13%

Akamai Corporate Events

Akamai CEO Invests $3 Million in Company Stock

On February 27, 2025, Akamai Technologies’ CEO, F. Thomson Leighton, made a significant personal investment by purchasing approximately $3 million of the company’s common stock on the open market. This move could indicate confidence in the company’s future prospects and may have implications for investor sentiment and market perception.

Akamai Approves 2025 Executive Compensation Program

On February 19, 2025, Akamai Technologies’ Board of Directors approved a 2025 bonus and equity compensation program for its top executives, including CEO F. Thomson Leighton and CFO Edward McGowan. The program ties executive bonuses to corporate performance objectives, with a focus on revenue and adjusted operating income targets, and includes a modifier based on environmental, social, and governance (ESG) objectives. Executives will receive bonuses in the form of vested common stock, and restricted stock units (RSUs) will be granted on March 3, 2025. These RSUs will vest based on both corporate performance and stock performance relative to the S&P 500 Index over a three-year period, impacting Akamai’s strategic focus on long-term growth and shareholder value.

Akamai Reports Strong Revenue Growth in 2024

On February 20, 2025, Akamai Technologies reported its financial results for the fourth quarter and full year of 2024, showing a steady increase in revenue, with a 3% rise in the fourth quarter and a 5% increase for the full year, despite challenges in delivery revenue. Security and compute revenue saw significant growth, with 16% and 25% year-over-year increases, respectively. The company is undergoing a transformation to cement its role as a leader in cybersecurity and cloud solutions, maintaining robust profitability with a strategic focus on long-term success.