How Would You Fix Akamai?
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For investors who own Akamai Technologies (AKAM), the past five years have been hard to watch. The stock lost 21.1% including dividends while the S&P 500 returned 74.2%. The fix depends less on Akamai’s sales, which have grown every year, than on how much operating profit the company keeps from them.
Akamai still makes money, earning $388 million of net income over the twelve months to September 30, 2026. So, if you were handed the keys on Monday, what would you fix first?
If You Ran Akamai, Fix Its Operating Margin First
Akamai kept 10.5 cents of operating profit from each dollar of sales over those twelve months, against 22.3 cents five years earlier.
On $4.39 billion of twelve-month revenue, each point of margin is worth about $43.9 million a year. Winning back the entire 11.8-point gap would yield about $518 million a year. Part of that gap begins higher up the income statement: gross margin was 56.4%, against 63.3% five years earlier.
So the goal you would set is plain: make Akamai’s new cloud spending pay, rather than shrink the parts of Akamai that are growing.
Akamai’s Cloud Computing Business Is Already Growing
The segment meant to make that spending pay is already running. Cloud Infrastructure Services, Akamai’s cloud computing business, brought in $109 million in the third quarter of fiscal 2026, up 34% from a year earlier.
In that quarter, Akamai signed an $11.6 billion commitment over seven years with Anthropic. On the November 5, 2026 call, management said the multiyear commitments it signed for the business in 2026 now total more than $14 billion. Once fully ramped, management expects the large deals it signed in 2026 to bring in about $2.2 billion of revenue a year at roughly a 30% operating margin on its own adjusted measure.
That is a forecast, not a result, on a measure where Akamai already earned 25% in the third quarter. If it holds, the deals could lift Akamai’s adjusted margin.
Akamai Pays For Its Cloud Before Earning From It
The second problem is timing. Management said it expects more margin pressure in the fourth quarter as costs for the cloud business, mainly rented data center space and power, arrive ahead of revenue.
Third-quarter capital spending hit $464 million, representing 41% of revenue. Supply chain and third-party data center delays will also shift about $30 million of revenue from the fourth quarter into 2027, though management said those issues are resolved and total contract revenue is unchanged. Akamai now guides fiscal 2026 revenue to $4.45 billion at the midpoint, down from the $4.49 billion it guided in its August 6 release.
What You Would Protect, And Where Akamai’s Cash Goes
Security is the part to protect. Security revenue was $622 million in the third quarter, up 9% from a year earlier. Akamai as a whole also still earns an operating profit, while the median of four listed peers, Cloudflare, Fastly, Fortinet and CrowdStrike, runs a 5.2% operating loss.
The hardest call is cash. Over the past twelve months Akamai spent $616 million on buybacks, against free cash flow of $211 million. Debt was $9.45 billion at September 30, 2026, up from $2.85 billion five years earlier. On November 12, 2026, Akamai closed a $2.5 billion offering of convertible notes. Management bought back no stock in the third quarter, and you would keep it that way until the cloud contracts pay.
Akamai stock fell 44.4% over the six months to November 12, 2026, while the S&P 500 rose 1.8%. Shares now trade at 8.7 times operating cash flow, compared to 15.4 for the S&P 500. Valued on earnings, the stock is not cheap, trading at 32.1 times against 21.9 for the index.
Buyers are paying less for Akamai’s cash flow at a time when most of that cash is going into capital spending. Cloud Infrastructure Services revenue is the number to watch when Akamai reports in February 2027.
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