Akamai Technologies AKAM, a cybersecurity and distributed-cloud company, landed more than $2.8 billion of multiyear cloud-infrastructure contracts during 2026, but that wasn't enough to keep investors excited. After an early rally, the stock flipped lower and traded about 5.5% down Friday morning as the market zeroed in on weakening profitability. Revenue still climbed 5% year over year to $1.10 billion, proving demand remains intact even if earnings failed to impress.
The growth story is becoming increasingly clear. Cloud infrastructure revenue exploded 39% to $99 million, while the higher-margin security business added another 10% to reach $604 million. The problem is that Akamai's legacy delivery and cloud-applications segment, still its biggest revenue generator, slipped 6% to $396 million. That older business continues to dilute the impact of the faster-growing cloud operation. GAAP operating income plunged 47% to $80 million, squeezing operating margin down to just 7%.
The GF Value chart tells a similar story. With the stock trading at $113.01 versus a GF Value of $112.52, the shares sit almost exactly at fair value, suggesting the recent selloff has already erased most of any valuation premium.
Management also kept buying back stock, spending $410 million at an average price of $134.54 per share—roughly 20% above where the stock traded Friday morning. Even more striking, those repurchases exceeded the company's $326 million of operating cash flow for the quarter, a pace that may not be sustainable if margins stay under pressure. Management guided third-quarter revenue to $1.105 billion-$1.130 billion, so the next chapter is straightforward. Investors don't need more contract announcements—they need proof that Akamai can turn booming cloud demand into stronger earnings and expanding margins. Until that happens, the stock could remain stuck in "show me" mode.
