Oppenheimer: Akamai's Cloud Business Is Undervalued, Anthropic Contract Supports Growth
Miles Bennett
Oppenheimer reiterated an Outperform rating on Akamai with a $180 target, arguing the market undervalues its cloud/AI-inference business — especially the $1.8 billion Anthropic contract that has yet to be fully priced in.
Why does Oppenheimer call Akamai undervalued?
Analysts Param Singh and Jake Heimowitz said Akamai's $1.8 billion Anthropic contract signals major cloud upside, yet the Street's valuation remains too conservative.
This means → the market still prices Akamai mainly on its legacy CDN and security franchises; cloud revenue growth is not yet in the stock.
Oppenheimer kept its Outperform rating and $180 target. Shares rose 4.5% by midday Thursday, up roughly 40% year-to-date.
How much does the expansion cost — and how is it structured?
Akamai plans to grow data-center capacity from about 17 MW at end-2025 to 80–100 MW by end-2028 — nearly a 5× increase in three years.
Its cloud infrastructure (CIS) for non-Anthropic clients uses prior-generation GPUs and CPUs, at roughly $20–25 million per MW — below emerging cloud rivals.
In plain terms = Akamai keeps build costs down by not chasing the newest silicon, turning cost efficiency into a selling point.
The Anthropic contract runs on a GPU-dense architecture at a higher cost — about $35 million per MW.
What does the valuation model say about the long run?
Oppenheimer used a multi-stage DCF model — discounting future cash flows back to today to price the company — with a forecast horizon extending to 2035.
At that point, Akamai's growth is assumed to converge with GDP, and free-cash-flow margins normalize above 20%.
This means → Oppenheimer sees a high-growth window lasting nearly a decade; today's share price reflects only a fraction of that runway.
What role does the legacy business play?
Akamai's content-delivery network (CDN — technology that copies website content to servers closer to users, speeding up access) and security business continue to grow.
This reflects that the cloud push is not a greenfield bet; it is built on top of two cash-flow-proven franchises in CDN and security.
Singh noted: "As growth opportunities are more fully understood by the market, shares should move higher."
Content is for reference only, not financial advice.