24 September 2026 · Built from Akamai's filings, releases and call transcripts through Q2 2026, plus independent industry sources · Not a valuation and not a recommendation.
Customers commit to a minimum level of usage for a year or more; Akamai carries the network as a largely fixed cost and earns a 30% non-GAAP operating margin on the blend (FY2025). Security sold over existing traffic runs at roughly high-80s% cash gross margin, delivery high-60s%. The new unit, a multi-year take-or-pay GPU contract, earns mid-60s to mid-70s% cash gross margin but needs capex of about three years of its annual revenue up front.
| What the business is | Akamai runs one of the most widely distributed edge networks on the internet and sells three things over it: security for websites, APIs and internal networks; content delivery; and cloud computing, now including GPU capacity for AI inference. Buyers are enterprises, media and software companies, and cloud and AI firms, on committed contracts. FY2025 revenue was $4,208M with more than 11,000 employees (FY2025 10-K). |
| Industry | Internet edge services: content delivery, edge security and distributed cloud. The underlying input deflates fast. 100 GigE IP-transit prices fell 17% a year compounded from Q2 2023 to Q2 2026 (TeleGeography), and three sub-scale CDNs exited in 2023–24. |
| How it makes money | Customers sign contracts of a year or longer that commit them to a minimum monthly, quarterly or annual usage level; Akamai recognises the commitment ratably, bills traffic above the minimum in the period it is served, and usually cuts the unit price at renewal; service-level credits for outages are the main deduction from billed amounts (FY2025 10-K). |
| Unit of economics | One committed enterprise contract running on a shared network. The count is not disclosed (unknown); six customers were each at least 1% of revenue and none reached 10% (Q3 2025 call; FY2025 10-K). The blended contract earned a 30% non-GAAP operating margin in FY2025, with cash gross margins of roughly high-80s% in security, high-60s% in delivery and low-70s% in compute (FY2025 10-K; CFO recollection, Q3 2025 call). |
| What protects it | Servers placed inside roughly 1,200 partner networks across ~700 cities, often in ISP rack space provided at a discount or no cost, plus a security product set that sells into traffic already on that network: 74–75% of customers buy both security and delivery (FY2025 10-K; Q3 2025 call). An entrant can buy servers but not quickly the ISP placements or the enterprise renewal history. |
| What drives earnings | Security growth, the highest-margin line; the pace of delivery price cuts at renewal; conversion of more than $2.8B of 2026 compute commitments into revenue at mid-60s to mid-70s cash gross margin; the capex and colocation cost of that build-out. |
| What to watch | Cloud Infrastructure Services (CIS) growth against the 'at least 50%' FY2026 guide, especially Q4 2026; capex as a share of revenue (guided ~40% for FY2026) and free cash flow; security growth against management's ~10% multi-year target. |
| Cycle exposure | Macro demand: low, revenue grew every year FY2015–FY2025, including 2020. Delivery pricing: secular decline, currently moderating after competitor exits. Investment cycle: high and at a peak, with capex guided to ~40% of revenue in FY2026 against 13–23% over FY2016–FY2025 and margins at decade lows. |
US dollars. Fiscal year ends 31 December; latest reported period is Q2 2026 (quarter ended 30 June 2026). '(inferred)' marks a conclusion reasoned from sourced facts, not a disclosed figure; '(calc)' marks arithmetic on disclosed figures.
Websites, apps, video and APIs have to reach users worldwide quickly and stay up while under attack. Serving everything from a few central data centers is slow over long distances and fragile when attack traffic arrives. Akamai places servers close to users, in more than 4,300 points of presence across about 700 cities in 130+ countries, integrated with roughly 1,200 network partners (FY2025 10-K). Some ISPs provide rack space and bandwidth 'at a discount or no cost' because hosting Akamai improves their own subscribers' experience (FY2025 10-K). Sitting in the path of traffic lets Akamai cache content, inspect every request for attacks and run customer code at the same point.
The unit of economics is a committed enterprise contract. A customer signs for a year or more, commits to minimum usage and pays for traffic above that minimum (FY2025 10-K). Most revenue is recognised ratably; overage is recognised as served; a small share of licences and professional services is recognised at a point in time (FY2025 10-K). A typical path, as an illustration: a retailer contracts for delivery plus web-application firewall and bot protection; its traffic flows through Akamai's points of presence, where the cost of colocation, bandwidth and server depreciation is shared with every other customer; cash arrives against the committed minimum each period; and at renewal the per-unit price usually steps down as volumes grow ('downward pricing of contract renewals', FY2025 10-K).
Contracted but unrecognised revenue (remaining performance obligations) was $5.2B at year-end 2025, 55% of it due within twelve months. By 30 June 2026 it had reached $7.6B, with only 40% due within twelve months (FY2025 10-K; Q2 2026 10-Q). The jump is long-dated compute commitments signed in 2026, which changes the shape of the backlog more than the near-term revenue.
| $M | FY2025 | Growth | Share | H1 2026 (new basis) | Growth |
|---|---|---|---|---|---|
| Security | 2,243.4 | +10% | 53% | 1,194.2 | +10% |
| Delivery | 1,256.7 | −5% | 30% | — | — |
| Cloud computing | 708.1 | +12% | 17% | — | — |
| of which CIS (old definition) | 313.9 | +36% | 7% | — | — |
| Delivery & other cloud applications | — | — | — | 785.1 | −6% |
| Cloud Infrastructure Services (CIS) | — | — | — | 193.9 | +39% |
| Total | 4,208.2 | +5% | 100% | 2,173.3 | +6% |
Sources: FY2025 10-K; Q2 2026 10-Q. From Q1 2026 Akamai moved 'other cloud applications' (API acceleration, cloudlets, NetStorage and similar) from Cloud computing into Delivery, and redefined CIS; prior quarters were recast but a full-year FY2025 recast was not published. Shares are calc.
Security (55% of H1 2026 revenue) covers web-application and API protection, bot management, DDoS scrubbing (Prolexic), microsegmentation of internal networks (Guardicore, bought 2021 for $610.7M) and API security (Noname, bought 2024 for $451.5M) (FY2022 and FY2025 10-Ks). Guardicore and API security together produced $293M in FY2025, up 43% (Q4 2025 release). In July 2026 Akamai added a secure-browser product by buying LayerX for about $205M (Q2 2026 10-Q). Security carries the highest cash gross margin of the three lines, in the high 80s% (CFO recollection, Q3 2025 call), because it reuses servers and traffic the delivery business already pays for.
Delivery (30% of FY2025 revenue) is the original CDN business and has shrunk every year from FY2021 to FY2025 (FY2022–FY2025 10-Ks). Its economics differ because cost follows peak traffic while revenue follows everyday usage: 'your cost is associated with your peak and your revenue more associated with the daily usage' (Q4 2022 call). The largest internet platforms stopped buying long ago; the FY2016 10-K names Amazon, Apple, Facebook, Google, Microsoft and Netflix as building their own delivery. Akamai now runs delivery for cash and as the entry point for security, holding delivery and security network capex to about 4% of revenue in its FY2026 plan (Q4 2025 call).
“From the second half of 2015 onward, our traffic growth rates have moderated, primarily due to the 'do-it-yourself' efforts by some of our customers that are among the large Internet platform companies: Amazon, Apple, Facebook, Google, Microsoft and Netflix.”Akamai FY2016 10-K
Cloud computing and CIS began with the $898.5M Linode purchase in 2022, a developer cloud with about 150,000 customers (FY2022 10-K; Q4 2021 call). Akamai first used it to move its own workloads off third-party clouds, saving 'well over $100 million per year' (Q4 2024 call). It then sold virtual machines, containers and, from late 2025, NVIDIA Blackwell GPU capacity branded Akamai Inference Cloud (Q3 2025 call). CIS is now a different unit from the rest of the business: dedicated capacity on multi-year take-or-pay contracts.
The largest such contract shows the arithmetic. A frontier-model company committed $1.8B over seven years, about $257M a year once ramped (Q1 2026 release; calc), and Akamai must spend $800–825M of capex within twelve months to serve it (Q1 2026 call). Capex therefore equals roughly 3.1–3.2 years of the contract's annual revenue (calc). At the CFO's stated range for such deals, mid-60s to mid-70s% cash gross margin and low-20s to low-30s% operating margin (Q2 2026 call), cash gross profit would repay the capex in roughly four to five years of a seven-year term (inferred; the CFO would not tie the range to any one contract). The old rule that 'a dollar of capex is a dollar of revenue' (Q4 2022 and Q3 2025 calls) no longer holds, and the CFO said so for 2026 because of memory-price inflation (Q4 2025 call).
The industry sells proximity. Content owners pay edge providers to hold content and run security near users; edge providers in turn buy transit, peering and colocation from ISPs, internet exchanges and data-center operators. The input is deflationary: 100 GigE IP-transit prices fell 17% a year compounded between Q2 2023 and Q2 2026 (TeleGeography). Hyperscalers also sell delivery at list prices that fall with volume, AWS CloudFront from $0.085/GB to $0.020/GB, and AWS now offers flat-rate CloudFront plans from $0 to $1,000 a month (AWS price list, September 2026). No independent long-run series of enterprise CDN prices per GB exists in public sources (unknown), so renewal price cuts can be observed only in Akamai's own disclosures.
The profit pool has moved from delivery to software sold over the network. Cloudflare, which sells mostly security and developer services, reports a 75.8% non-GAAP gross margin; Zscaler, pure security, 80%; Fastly, still mainly delivery, 60.9% (FY2025/FY2026 releases). Akamai sits at about 59% (FY2025 10-K; calc), between the two groups, reflecting its mix. Delivery at sub-scale has proven unprofitable: Lumen and StackPath exited in 2023 and Edgio (Limelight plus Yahoo Edgecast) filed for Chapter 11 in September 2024 with adjusted EBITDA near breakeven on about $94M of quarterly revenue (Edgio 8-Ks). Akamai bought the customer contracts of all three cheaply, for $79.7M, $51.2M and $158.3M (FY2025 10-K), but not their networks; Microsoft moved Azure customers on Edgio to its own Azure Front Door (Microsoft).
The ceiling on delivery is set by customers who build their own. Content and cloud networks, 'most specifically a handful of companies like Google, Meta, Microsoft, and Amazon', accounted for more than 70% of global bandwidth used in 2023 (TeleGeography). Netflix places its own appliances inside more than a thousand ISPs at no charge (Netflix Open Connect). Akamai's largest customer, which management did not name, began its own build-out in 2024; management expected a 1–2 point annual headwind to group growth before that customer stabilises at 2–3% of revenue under a five-year minimum-spend contract (Q4 2024 call).
| Latest fiscal year | Revenue $M | Growth | Gross margin | Op. margin (non-GAAP) | Capex / revenue |
|---|---|---|---|---|---|
| Akamai FY2025 | 4,208 | +5% | ~59% GAAP | 30% | 19% |
| Cloudflare FY2025 | 2,168 | +30% | 75.8% | 14.0% | 12–15% (2026 guide) |
| Fastly FY2025 | 624 | +15% | 60.9% | 3.6% (calc) | n/a |
| DigitalOcean FY2025 | 901 | +15% | 60% GAAP | Adj. EBITDA 42% | n/a |
Sources: Akamai FY2025 10-K and Q4 2025 release; Cloudflare Q4 2025 release and investor deck; Fastly Q4 2025 release; DigitalOcean Q4 2025 release. Gross margins non-GAAP unless marked.
Cloudflare is the competitor that matters. It is half Akamai's size and growing six times as fast, with revenue up 36% in Q2 2026 (Cloudflare Q2 2026 release). It acquires customers bottom-up: 332,000 paying customers, up 40% as free-tier users graduate, and 4,298 customers paying more than $100k a year (Cloudflare Q4 2025 deck). It reports 330 cities, 13,000 directly connected networks and 477 Tbps of capacity. Akamai counts more locations (about 700 cities) but publishes no capacity figure (unknown), and the two companies define network partners differently.
In security the leadership is shared rather than owned. Forrester's Q1 2025 web-application-firewall evaluation named both Akamai and Cloudflare Leaders, and its Q3 2024 microsegmentation evaluation named Akamai Guardicore and Illumio (Forrester, via vendor releases). Gartner's last ranked Magic Quadrant for web-application and API protection dates from 2022; it now publishes only an unranked Market Guide. Akamai's security revenue grew 10% in FY2025 while Cloudflare as a whole grew 30% and Zscaler 25% (company releases), so Akamai is holding a large installed base rather than winning share in the category (inferred).
In compute Akamai is a small entrant against incumbents. Amazon, Microsoft and Google hold about 63% of cloud infrastructure spending, and Synergy Research reports smaller providers 'steadily losing market share' in aggregate, with GPU 'neoclouds' the exception (Synergy Research, Q2 2026). Akamai's one verifiable price advantage is egress: $0.005/GB on its cloud against AWS's first-tier $0.09/GB, about 18 times lower, while compute list prices are similar (AWS and Linode price lists). Its FY2026 capex of roughly $1.8B (calc from ~40% of guided revenue) compares with Amazon's plan of about $200B (Amazon Q4 2025 release), and the Q2 2026 10-Q concedes that incumbents 'exert significant purchasing power and priority access to servers, memory, co-location capacity and power'.
| Akamai claim | Verdict | Basis |
|---|---|---|
| Most distributed edge platform | Partially supported | More locations than Cloudflare (700 vs 330 cities); Cloudflare publishes more interconnection and capacity; the largest content owners run their own networks. |
| Leader in web app and API security | Supported, as co-leader | Forrester WAF Leader Q1 2025 alongside Cloudflare; no independent market-share data (unknown). |
| Cheaper cloud than hyperscalers | Egress yes; compute partly; AI savings unverified | List egress ~18x cheaper; VM list prices similar; the '86%' inference-savings claim has no independent source. |
The companies that win here combine three things: a dense network already paid for by high-volume traffic, high-margin software sold over it, and a cheap way to turn developers and small firms into enterprise accounts (inferred from the exits and margins above). Cloudflare fits that description most closely. Akamai has the first, a strong but shared version of the second and little of the third, and its compute push is a bet on a fourth, more capital-intensive business in which it has no scale advantage.
Revenue compounded at about 6.7% a year from FY2015 to FY2025, from $2,197M to $4,208M (FY2017 and FY2025 10-Ks; calc). Akamai spent about $3.14B on acquisitions and customer-contract purchases over FY2016–FY2025 (cash-flow statements; calc), so part of that growth was bought. Underneath, the mix has inverted: security went from 11.6% of revenue in FY2015 to 53% in FY2025, while delivery went from about 60% of revenue in FY2020 to 30% (FY2016–FY2025 10-Ks).
| Revenue $M | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|---|
| Security | 1,061.6 | 1,334.8 | 1,541.9 | 1,765.3 | 2,042.7 | 2,243.4 |
| Delivery | 1,929.8 | 1,873.2 | 1,669.3 | 1,542.4 | 1,318.1 | 1,256.7 |
| Cloud computing | 206.7 | 253.1 | 405.5 | 504.2 | 630.4 | 708.1 |
| Total | 3,198.1 | 3,461.2 | 3,616.7 | 3,811.9 | 3,991.2 | 4,208.2 |
Sources: FY2022–FY2025 10-Ks (categories as recast in each; FY2020–FY2021 split from the former Edge Technology Group). Cloud computing includes Linode from March 2022 ($103.5M in FY2022).
Revenue by line, $M, FY2020–FY2025 (FY2022–FY2025 10-Ks)
| FY2025 | H1 2026 | |
|---|---|---|
| Reported revenue growth | +5.4% | +5.6% |
| Currency effect | +0.3 pt ($13.7M) | +0.8 pt ($17.5M) |
| Acquired revenue (Edgio contracts, Noname, Fermyon) | ~1 pt (management estimate) | ~0 pt; Edgio laps in Q1 |
| Largest customer's own build-out | −1 to −2 pt (guided) | not disclosed |
| Organic, constant currency | ~4% (inferred) | ~5% (inferred) |
Sources: FY2025 10-K; Q2 2026 10-Q; Q4 2024 call ('about a point in total from inorganic'). The FY2025 10-K calls acquired revenue 'not material' but says delivery was 'positively impacted' by the Edgio, Lumen and StackPath contracts; Edgio's full-year contribution was not disclosed (it added about $9M in the last two weeks of 2024, Q4 2024 call).
Price and volume pull in opposite directions by line. In delivery, traffic volume still grows but 'remains moderated as compared to prior years' (FY2025 10-K), and renewal price cuts outrun it. In security, growth comes from selling more products per customer: API security revenue went from a $57M annual run rate at the end of 2024 to about $100M a year later (Q4 2024 and Q3 2025 calls). Geography added steadily: international revenue rose from 27% of the total in FY2015 to 49% in FY2025 and grew 8% in FY2025 against 3% in the United States (FY2017 and FY2025 10-Ks).
More than $2.8B of multi-year commitments signed in 2026, including $1.8B over seven years and more than $600M over four (Q2 2026 release). Management guides CIS growth of at least 50% for FY2026 and group growth accelerating to the low teens in 2027 (Q2 2026 call). The demand is an AI-spending boom; the choice to fund it with 40% capex is management's.
API security, Guardicore segmentation and now LayerX sold to existing delivery and security customers. Guided to high-single-digit constant-currency growth in FY2026, below the ~10% multi-year target set in February 2025 (Q2 2026 and Q4 2024 calls).
A permanent drag as renewal price cuts outrun traffic growth; 'Delivery & other cloud applications' is guided to a mid-single-digit decline in FY2026 (Q2 2026 call).
The Lumen, StackPath and Edgio contracts added revenue and eased pricing; 'pricing declines have moderated' as rivals left (Q3 2025 call). The benefit ends once those contracts are absorbed and renewed.
About one point of growth a year (Q4 2024 call). LayerX is expected to add no material FY2026 revenue (Q2 2026 call).
About $1.2B of revenue is billed in foreign currencies, mainly euro, yen and sterling (Q4 2024 call).
The FY2026 plan is back-end loaded. CIS grew 40% in Q1 and 39% in Q2 against the full-year 'at least 50%' guide, and the CFO expects no acceleration in Q3 and 'a big hockey stick' in Q4 as the large contracts start billing (Q1 and Q2 2026 calls). Revenue from the $1.8B contract is expected at only $20–25M in Q4 2026 (Q1 2026 call), so most of the 2027 acceleration depends on installing capacity on schedule.
Most network cost is fixed in the short run. Colocation leases, bandwidth commitments and server depreciation are paid whatever traffic arrives, so added security revenue on the same servers falls largely to profit, and lost delivery revenue falls straight out of it. For a decade Akamai offset delivery price cuts by cutting its own unit costs, a line that ran in every 10-K from FY2016 to FY2023 and was then dropped (FY2016–FY2025 10-Ks). Bandwidth fees rose only from $151M to $193M between FY2015 and FY2025, while colocation rose from $126M to $349M and network build-out from $58M to $237M as compute sites were added (FY2017 and FY2025 10-Ks).
Gross margin, before amortisation of acquired intangibles, therefore fell from 67.0% in FY2015 to 58.9% in FY2025 and 56.0% in H1 2026 (10-Ks; Q2 2026 10-Q; calc). The CFO expects cash gross margin of about 70% in Q3 2026 and attributes the decline to 'the significant increase in colocation' for CIS (Q2 2026 call). The gap between GAAP and non-GAAP operating income was $687M in FY2025 (calc), mainly stock-based compensation of $459M (10.9% of revenue), acquired-intangible amortisation of $111M and restructuring of $58M (FY2025 10-K). Stock-based compensation has more than doubled since FY2022's $217M.
| FY2016 | FY2020 | FY2023 | FY2025 | |
|---|---|---|---|---|
| Revenue ($M) | 2,348 | 3,198 | 3,812 | 4,208 |
| Security share of revenue | ~16% | 33% | 46% | 53% |
| Gross margin (ex. acquired intangibles) | 65.5% | 64.6% | 60.4% | 58.9% |
| GAAP operating margin | 19.9% | 20.6% | 16.7% | 13.5% |
| Capex (incl. capitalised software) / revenue | 13.5% | 22.9% | 19.2% | 19.5% |
| Operating cash flow − capex ($M) | 556 | 483 | 618 | 699 |
Sources: FY2018, FY2022, FY2025 10-Ks; margins and cash figures calc. Not fully comparable: FY2016 is recast for ASC 606. Server useful life was extended from four to five years in 2019 (cut depreciation by $31.5M in FY2019) and from five to six years in 2023 (cut it by $62.7M, about 1.6 points of margin, in FY2023 and $47.7M in FY2024); the FY2025 effect is no longer disclosed (FY2019, FY2023–FY2025 10-Ks). Revenue categories changed in 2018, 2021, 2022 and 2026.
Gross margin (ex. acquired intangibles) and capex as % of revenue (10-Ks; Q2 2026 10-Q; Q2 2026 call). Dashed segment: FY2026 guidance.
Non-GAAP operating margin tells a steadier story: 31% in FY2020, 32% in FY2021, 30% in FY2023 and FY2025 (Q4 2020, Q4 2021, Q4 2023 calls; FY2025 10-K), helped in part by the two depreciation changes. It fell to 25% in Q2 2026 and is guided to 25–26% for FY2026, against 26–28% guided in February (Q2 2026 and Q4 2025 releases). Management has said it is 'willing to do… some of these deals… at margins that might be sub the 30% operating margin' and 'won't be in a margin expansion' period (Q1 2026 call).
Cash conversion is strong before capex. Operating cash flow was $1,519M in FY2025, 36% of revenue, and cash capex $820M, leaving $699M (FY2025 10-K; calc). In H1 2026 the same measure fell to $221M (Q2 2026 10-Q; calc), before a guided $475–525M of Q3 capex and full-year capex of about 40% of revenue (Q2 2026 call). Management has also flagged up to $500M more for GPUs, about $60M in 2026 and the rest early in 2027, because 'all of our GPU capacity is completely sold out' (Q2 2026 call).
Over FY2016–FY2025 Akamai generated $12.0B of operating cash flow and spent, in order: $5.67B on capex, $5.15B on buybacks (64.6M shares) and $3.14B on acquisitions (10-Ks; calc). It paid no dividend. The difference was funded by convertible notes, which grew from $690M to $4.14B of principal (FY2016 and FY2025 10-Ks). Buybacks aimed to offset employee dilution and did more: shares outstanding fell 18%, from 177.2M to 144.7M (calc), though about half of gross repurchases only offset issuance (calc).
2026 reversed that order. Akamai bought back $616M of stock in H1, then paused repurchases 'to reallocate capital to support our high growth CIS pipeline' (Q2 2026 call). In May it issued $3.5B of zero-coupon convertibles due 2030 and 2032, with conversion prices of $201.41 and $190.81, hedged with note hedges and sold warrants; $350M of the proceeds repurchased 2.48M shares and the rest funds the CIS build-out (8-K, 22 May 2026). It also raised the revolver's leverage covenant to 4.75 times (8-K, 18 May 2026).
At 30 June 2026 convertible principal was $7.64B against $4.62B of cash and securities, net debt of about $3.0B or 1.7 times FY2025 adjusted EBITDA of $1,802M (Q2 2026 10-Q; FY2025 10-K; calc). The LayerX purchase (~$205M, closed 2 July 2026) post-dates those balances; no other transaction was pending as of the Q2 2026 10-Q.
The pattern suggests capital is ranked by expected return rather than by a fixed payout formula, and that management now judges GPU capacity on take-or-pay contracts to beat its own shares (inferred). It chose convertible debt over equity, citing an investment-grade rating that 'helps us with our colocation providers' (Q2 2026 call).
| Exposure | Latest | Cyclicality |
|---|---|---|
| Security | 55% of H1 2026 revenue | Low; budget-protected, renewal-priced |
| Delivery & other cloud applications | 36% of H1 2026 revenue | Traffic-sensitive; secular price decline |
| Cloud Infrastructure Services | 9% of H1 2026 revenue | High; tied to AI and cloud capex |
| International revenue | 49% of FY2025 revenue | Currency: ~$1.2B billed in foreign currency |
Sources: Q2 2026 10-Q; FY2025 10-K; Q4 2024 call. Revenue by customer industry is not disclosed (unknown).
Demand for the existing business has not been macro-cyclical. Revenue grew every year from FY2015 to FY2025 and rose 10.5% in 2020, when pandemic traffic growth was 'about double what we normally see' (FY2022 10-K; Q4 2020 call). Traffic swings affect delivery overage and, through traffic-based pricing, some security revenue, but committed minimums cushion both (FY2025 10-K).
The business is at the peak of its own investment cycle. Capex guided at about 40% of revenue in FY2026 compares with a 13–23% range over FY2016–FY2025; GAAP operating margin of 9.0% in H1 2026 compares with a peak of 22.6% in FY2021; and gross margin is the lowest in the decade (10-Ks; Q2 2026 10-Q; calc). Delivery is past its worst: its decline eased from 18% in Q4 2024 to 2% in Q4 2025 (Q4 2024 and Q4 2025 calls). Input costs are moving the wrong way, with 'price increases for co-location, server and memory costs' driven by hyperscaler demand (Q2 2026 10-Q).
The downside case is a turn in the AI capital cycle. Akamai is buying GPUs and memory at prices inflated by hyperscaler demand and locking them into multi-year contracts. Take-or-pay terms protect revenue for the contract life, but if inference prices fall or demand cools, capacity re-prices at renewal and any unsold capacity carries full depreciation and colocation cost (inferred). Colocation leases are already expensed 'in advance of these… locations being fully utilized' (Q2 2026 10-Q).
| Indicator | Why it matters | Where published |
|---|---|---|
| CIS revenue and growth | Tests conversion of $2.8B commitments; Q4 2026 is the test | Akamai quarterly release, 10-Q |
| Capex / revenue and OCF − capex | Size and return of the build-out | Quarterly release; cash-flow statement |
| Remaining performance obligations | New commitments and their duration | 10-Q revenue note |
| Security constant-currency growth | Health of the highest-margin line vs ~10% target | Quarterly release |
| Cloudflare large customers and growth | Share shift in enterprise edge and security | Cloudflare quarterly release and deck |
| IP-transit and hyperscaler egress prices | Delivery deflation and the compute price edge | TeleGeography; AWS price list |
Before forming a thesis an investor would need three things: the payback and depreciation schedule of the CIS contracts, evidence that security growth has stabilised rather than kept decelerating, and a view on whether the $7.64B of convertibles is refinanced or settled in shares.