Oppenheimer analysts have issued a bullish call on Akamai Technologies, arguing that the market is underestimating the company's push into artificial intelligence (AI) cloud services. The broker points to a recently disclosed $1.8 billion, seven-year deal—the largest in Akamai's history—as evidence that its AI inferencing business is gaining traction but remains underpriced by investors.
What's the Big Deal?
Akamai, best known for its content delivery network (CDN) that speeds up web traffic, has been pivoting toward cloud infrastructure and edge computing. The company's latest contract, a $1.8 billion agreement spanning seven years, is a major win for its cloud services division. Oppenheimer sees this as a signal that Akamai's AI inferencing—the process of running AI models to make predictions or decisions—is becoming a meaningful revenue driver.
The broker forecasts that Akamai's cloud infrastructure services revenue could top $4.1 billion by 2035. That projection implies significant growth from current levels, as the company expands beyond its traditional CDN business into higher-margin cloud and AI services. For context, Akamai reported total revenue of about $3.9 billion in 2024, so the cloud infrastructure segment alone could eventually surpass the company's current overall revenue.
Why Investors Might Be Missing the Story
Oppenheimer's analysis suggests that Wall Street is still pricing Akamai largely as a legacy CDN provider, overlooking its potential in AI and edge computing. The $1.8 billion deal, which the company called its largest ever, underscores that demand for AI inferencing at the edge—processing data closer to where it's generated rather than in centralized data centers—is accelerating. This trend is particularly relevant as businesses deploy AI applications that require low latency, such as autonomous vehicles, real-time analytics, and smart manufacturing.
The broader market context also matters. AI infrastructure spending has been a hot topic, with companies like Nvidia and Amazon Web Services dominating headlines. However, Akamai's edge computing approach offers a differentiated value proposition. Instead of building massive data centers, Akamai leverages its global network of servers to run AI models closer to users, reducing delays and bandwidth costs. This could appeal to enterprises looking for cost-effective AI deployment.
Oppenheimer's call comes amid a mixed period for tech stocks, with some analysts cautioning about stretched valuations in certain sectors. For instance, the broker recently downgraded Goldman Sachs and Morgan Stanley, citing high valuations. But for Akamai, Oppenheimer sees room for upside if the market re-rates the stock to reflect its AI cloud potential.
What It Means for Everyday Investors
For individual investors, the key takeaway is that Akamai's AI cloud business may be a hidden growth engine. The $1.8 billion contract provides concrete evidence that large customers are committing to long-term deals, which can provide revenue visibility and stability. If Oppenheimer's forecast of $4.1 billion in cloud infrastructure revenue by 2035 proves accurate, it could significantly boost Akamai's overall earnings and stock price.
However, investors should be cautious. Long-term forecasts are inherently uncertain, and Akamai faces competition from cloud giants like Amazon, Microsoft, and Google, as well as specialized AI chipmakers. The company's success will depend on its ability to execute and win more large contracts. Additionally, the broader AI infrastructure market is still evolving, and demand could shift if economic conditions weaken or if alternative technologies emerge.
That said, the deal highlights a growing trend: edge AI is becoming a real business, not just a buzzword. For investors looking to diversify beyond the usual AI winners, Akamai offers a different angle—one that combines existing infrastructure with new growth opportunities. As always, it's wise to consider how any stock fits into a diversified portfolio rather than betting on a single company's projections.
Oppenheimer's report adds to a growing chorus of analysts reassessing Akamai's value. Whether the market will follow suit remains to be seen, but the $1.8 billion deal is a strong signal that the company's AI cloud strategy is gaining momentum.
