AKAM Q3 Deep Dive: Cloud Infrastructure Momentum and AI Edge Strategy Shape Outlook

Cloud technology company Akamai Technologies (NASDAQ:AKAM) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 5% year on year to $1.05 billion. The company expects next quarter’s revenue to be around $1.08 billion, close to analysts’ estimates. Its non-GAAP profit of $1.86 per share was 13.7% above analysts’ consensus estimates.

Is now the time to buy AKAM? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Akamai Technologies delivered third-quarter results that surpassed Wall Street’s revenue and earnings expectations, prompting a positive market reaction. Management attributed performance to accelerating demand for its Cloud Infrastructure Services, strong growth in high-value security products, and stabilizing delivery revenue. CEO Tom Leighton highlighted that Akamai’s distributed platform and differentiated approach are increasingly recognized by both customers and industry analysts. Leighton pointed out, “Our business performed well across the spectrum of our portfolio with accelerating momentum for our Cloud Infrastructure Services, continued strong demand for our high-growth security products, and continued stabilization of our delivery revenue.”

Looking ahead, Akamai’s guidance reflects optimism around continued cloud and security expansion, with a particular focus on the newly launched Akamai Inference Cloud. Management believes AI inference at the edge will drive the next phase of growth as enterprises seek real-time, low-latency processing closer to users. CFO Ed McGowan cautioned that the ramp-up of new contracts in the compute segment may be gradual but highlighted that, “there’s a very good chance we could accelerate growth in our CIS business next year.” The company’s investments in AI infrastructure, go-to-market transformation, and security attach rates are expected to shape its results in the coming quarters.

Key Insights from Management’s Remarks

Management identified robust demand for cloud infrastructure and security solutions as primary drivers this quarter, while also noting the transformative launch of its AI inference platform.

• Cloud Infrastructure Services acceleration: Akamai’s Cloud Infrastructure Services (CIS) revenue grew 39% year over year, with management citing multiple new and expanded contracts—including a multiyear renewal with a top U.S. cloud provider. CEO Tom Leighton described CIS as "the big driver of our future growth," emphasizing its role in delivering distributed computing at scale.
• AI Inference Cloud launch: The launch of Akamai Inference Cloud, developed in partnership with NVIDIA, marks a strategic pivot to meet rising demand for AI inference at the edge. The platform is designed to enable real-time, low-latency AI applications by bringing compute resources closer to end users, which management said is only possible "by distributing advanced GPUs to the edge."
• High-growth security products: Demand for API security and Zero Trust Enterprise Security remained strong, with both segments growing rapidly. Management highlighted a $7 million contract with a major European bank for API security as part of a broader $31 million commitment, illustrating expanding customer adoption and cross-sell opportunities.
• Delivery revenue stabilization: While traditional delivery revenue declined modestly, the rate of decline moderated, and management pointed to improved pricing dynamics and fewer competitors in the marketplace. CFO Ed McGowan noted, "pricing declines have moderated consistently throughout the year."
• Go-to-market transformation: Akamai continued to invest in specialized sales capacity, particularly for security and compute. Management expects the transformation to be largely complete by early next year, supporting increased productivity and longer-term contract wins.

Drivers of Future Performance

Akamai’s forward outlook is shaped by demand for edge AI computing, ongoing security adoption, and disciplined execution on sales and infrastructure investments.

• Edge AI and inference opportunities: Management expects the Akamai Inference Cloud to drive substantial demand, as enterprises shift AI workloads to the edge for faster, more personalized applications. Leighton indicated customer interest is high, stating, “We’re in the first inning of a very exciting game,” with use cases spanning from e-commerce personalization to robotics and media workflows.
• Security product cross-sell and attach: The company sees significant runway for security solutions, especially API security and segmentation, as more customers deploy AI-powered and API-centric applications. The attach rate of security products to compute and delivery services is expected to rise, creating additional revenue streams.
• International and go-to-market execution: Akamai’s international teams, particularly in Asia-Pacific, are leading large compute and security deals. Management emphasized the importance of hiring specialized sales talent and completing its go-to-market transformation to unlock further growth, while cautioning that the ramp period for new hires may delay full productivity until mid-next year.

Catalysts in Upcoming Quarters

In the quarters ahead, our team will be watching (1) the adoption rate and early customer wins of Akamai Inference Cloud, (2) progress in cross-selling high-growth security products to compute and delivery customers, and (3) the pace of international deal activity, particularly in Asia-Pacific. Execution on the ongoing salesforce transformation and realization of operating leverage from AI infrastructure investments will also serve as key signposts.

Akamai Technologies currently trades at $77.85, up from $73 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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