Akamai Technologies saw its stock climb more than 23% in premarket trading Friday following the announcement of a massive cloud computing agreement with AI firm Anthropic. The deal underscores the intense demand for computing capacity as frontier AI developers scale their workloads.
Under the agreement, Anthropic will pay Akamai $11.6 billion over seven years for access to CPU-based infrastructure from Akamai Cloud's distributed AI platform. The contract also includes an option to expand the arrangement by an additional $9 billion, potentially bringing the total commitment to roughly $20 billion.
The news prompted several Wall Street analysts to raise their price targets, with Guggenheim lifting its target to $225 from $190, implying more than 100% upside from Thursday's close. The firm maintained a Buy rating, noting the deal should be profitable, though margins will likely remain below Akamai's core business levels.
Anthropic deal reshapes Akamai's AI outlook
The new commitment adds to more than $2.8 billion in existing multiyear cloud commitments announced this year. JPMorgan analysts said the additional $9 billion option could follow "a path of low resistance" toward being exercised, highlighting the potential scale of Anthropic's future computing needs.
As part of the agreement, Anthropic will receive warrants representing up to 5% of Akamai's shares outstanding, with an exercise price of $111.33, close to Thursday's closing price. This gives Anthropic the right, but not the obligation, to purchase Akamai shares at a predetermined price in the future.
For Akamai, the deal requires substantial upfront investment before revenue begins to flow. The company expects no revenue contribution this year, followed by approximately $150 million to $300 million in 2027, eventually ramping to about $1.7 billion annually.
Heavy capital spending needed to scale
Akamai plans to spend approximately $5.5 billion in capital expenditure to support the agreement, including $1.7 billion this year. This investment requirement has raised questions about potential additional financing needs next year.
JPMorgan analysts flagged the possibility, and CFO Edward McGowan did not rule out additional capital during a call with analysts. He pointed to Akamai's $4.6 billion in cash and $1 billion in available bank lending commitments, adding, "If we need additional capital, we'll certainly have a discussion with our board and with our senior management team and do what we think is best for shareholders overall."
The upfront spending means near-term financial impact will differ significantly from eventual revenue contribution, making infrastructure deployment pace and customer utilization key factors for investors. Morgan Stanley analysts estimate operating margins on the Anthropic deal will be about 30%, and they highlighted Akamai's use of CPUs rather than GPUs as a potential advantage due to lower power requirements.
AI inference business expands rapidly
The Anthropic agreement comes as Akamai's cloud infrastructure business already grows quickly. Cloud Infrastructure Services revenue increased 39% year over year to $99.3 million in the second quarter, driven by AI infrastructure demand, higher GPU deployments, and continued adoption of its distributed cloud platform.
KeyBanc analysts described the acceleration in Akamai's AI inference business as "unthinkable," noting commitments expanded from 2 to 5 megawatts in October 2025 to between 95 and 105 megawatts now. Akamai expects third-quarter revenue of $1.105 billion to $1.13 billion with a non-GAAP operating margin of 24% to 26%.
Analysts lift targets but flag risks
Evercore ISI reiterated an Outperform rating and a $175 price target, while UBS raised its target to $148 from $143, retaining a Neutral rating. UBS analyst Roger Boyd said the contract could provide additional upside to Akamai's low-teens fiscal 2027 growth guidance, but noted potential offset from margin and free cash flow pressure as contracts ramp.
TD Cowen raised its price target to $149 from $140, maintaining a Hold rating. The firm said the contract highlights continued scarcity of computing capacity in the AI infrastructure cycle, with frontier model developers competing for access to compute, creating opportunities for alternative providers like Akamai.
This article is for informational purposes only and does not constitute financial advice.
