Akamai Down 29%: What Would Its CEO Say?

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Shareholders of Akamai Technologies (AKAM) have endured a difficult three months. The stock lost 29.2% in total return over the three months to November 3, 2026, while the S&P 500 lost 1.7%. Management would tell you its second-quarter margin landed right where it expected.

Sales grew at a faster pace over the twelve months to June than they did a year earlier. Profit has shrunk, though, while Akamai spends heavily to build its cloud business. So how strong is management’s case, in its own words?

Management Points To Akamai’s Security Business And Margins

Management’s first point would be the size of Akamai’s security business. On the company’s August 6, 2026 call, management said it expects the security portfolio to bring in “more than $2.4 billion in revenue this year,” which would make Akamai one of the largest security providers in the market.

The second point is that Akamai’s margin matched the company’s plans. Akamai recorded an adjusted operating margin, the company’s own measure, of 25% in fiscal Q2 2026. Management said that figure was in line with its expectations.

While those are fair points, they do not settle the outlook. On the same day, management trimmed its full-year 2026 forecasts for revenue, adjusted operating margin and adjusted earnings per share.

Sales Keep Growing As Akamai’s Profit Shrinks

Akamai’s sales have held up over the past year, but its profit has not. Revenue climbed 5.9% to $4.32 billion over the twelve months to June 30, 2026, compared with 4.0% growth in the twelve months before.

Over those same twelve months, Akamai’s operating margin, the share of sales left after running the business, fell to 11.9% from 15.4% a year earlier. That marks its lowest operating margin at any quarter end in the past ten years. This is the margin as reported in company filings, not the adjusted measure behind management’s 25%.

Even after the fall, you are paying more than the market for each dollar of Akamai’s profit. At the November 3 close, the stock traded at 30.5 times its trailing earnings, against 22.8 for the S&P 500.

Where Akamai’s Money Is Going

Management has been open that the spending is a choice. It said Akamai took on bigger colocation investments, higher depreciation and more staff costs in fiscal Q2 2026, all to speed up growth in its cloud infrastructure services.

That spending is set to grow. Management expected capital spending of $475 million to $525 million in fiscal Q3 2026, up from $347 million in fiscal Q2. Akamai also raised $3.5 billion in convertible debt in May and temporarily paused share buybacks to put the money toward its cloud pipeline.

Margins on the new contracts would be a little lower while they ramp up, management said, before rising toward the adjusted operating margins of the low-20s to low-30s that it says such large contracts typically earn.

Akamai Has Billions In Signed Cloud Contracts

The strongest part of Akamai’s case relies on work already signed. On the August 6 call, management said multiyear commitments signed so far in 2026 for its cloud infrastructure services were more than $2.8 billion. On September 24, 2026, Akamai said Anthropic had agreed to an $11.6 billion, seven-year commitment for cloud services.

Management said revenue from large deals like these usually starts six to nine months after signing. On the August 6 call, before the Anthropic deal, management said it expects Akamai’s overall revenue growth to accelerate into the low teens in 2027. Cash generation also remains steady, with cash from operations at $1.45 billion over the twelve months to June, the same as a year earlier. Management also expects full-year 2026 capital spending of about 40% of revenue.

Management expects revenue from its cloud infrastructure services to grow at least 50% in constant currency in 2026, and that revenue is the number to watch. Akamai is expected to report its fiscal Q3 2026 results on November 5, 2026.

Does This Mean You Should Act On AKAM?

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