Akamai Technologies (AKAM) Stock Forecast & Price Target

Akamai Technologies has demonstrated solid financial performance, with its Security segment growing by 10% in constant currency during the second quarter, and positive momentum expected to continue into 2025. The Compute segment also showed robust growth at 13% in constant currency, bolstered by the strength of cloud infrastructure services, and total revenue increased by 6% in constant currency, surpassing expectations. Furthermore, management anticipates significant revenue growth from newer security solutions and major contracts, with a combined revenue increase of 30-35% year-over-year projected for Zero-trust enterprise and API security solutions in 2025, indicating a strong business trajectory.

Akamai Technologies is facing a challenging environment as its content delivery segment has shown stagnant growth for three consecutive quarters, with future compute growth projections appearing to fall short of the company's 15% target. Additionally, the potential for lower profit margins exists if Akamai cannot reduce bandwidth costs at a comparable or better rate, while internal CDN capabilities being developed by large customers could continue to siphon off business. The competitive dynamics within the CDN industry are troubling, characterized by an annual price decline of roughly 25%, which could further compress revenues as competitors exit the market or become less viable.