Akamai Technologies Inc (NASDAQ:AKAM, XETRA:AK3) was upgraded to 'Buy' from 'Neutral' by Bank of America analysts, who said the company is increasingly being viewed as an artificial intelligence infrastructure play rather than a legacy content delivery network provider.
The firm also raised its price target to $175 from $130. Shares of Akamai traded up more than 5% at about $157 on Wednesday afternoon.
The bank’s analysts wrote that recent large cloud infrastructure wins, including a $1.8 billion, seven-year agreement, support the company’s shift toward distributed AI infrastructure demand.
“The story has shifted from a legacy delivery network to a credible AI infrastructure platform,” the analysts wrote, adding that demand for distributed AI appears “real, not just narrative.”
Bank of America highlighted accelerating growth in Akamai’s Cloud Infrastructure Services (CIS) segment, which grew 40% year over year, driven by AI workloads and edge inference applications. Analysts said Akamai’s distributed architecture and low-latency capabilities are helping it compete against centralized hyperscale cloud providers.
The firm expects the newly announced infrastructure deal to contribute $20 million to $25 million in quarterly revenue beginning in the fourth quarter, creating more recurring, capacity-based revenue streams.
Akamai’s overall revenue increased 6% year over year, supported by CIS growth and an 11% increase in its security business, which offset a 7% decline in delivery revenue.
The analysts believe that the changing revenue mix should help drive future growth and margins as delivery trends stabilize.
Bank of America forecasts revenue growth accelerating from 7% in 2026 to 11% in 2027, while earnings per share are projected to rise from $6.93 in 2026 to $9.03 by 2028.
The analysts noted that higher AI-related investments are expected to pressure near-term free cash flow, with capital expenditures projected at $800 million to $825 million over the next 12 months.
They also cited risks including slower AI adoption, pricing pressure in delivery services, and increased spending weighing on margins.