Akamai Shares Rise 21.3% After $11.6 Billion Anthropic Cloud Services Agreement

Akamai Technologies (NASDAQ:AKAM) shares rose 21.3% in premarket trading after the company announced a seven-year cloud services commitment with artificial intelligence company Anthropic valued at $11.6 billion.

The agreement is intended to support Anthropic’s CPU computing workloads across Akamai Cloud’s distributed infrastructure.

The arrangement also includes provisions under which the relationship could expand by as much as an additional $9 billion, taking the potential total commitment to approximately $20 billion. The additional amount is not guaranteed and will depend on the expansion provisions being exercised.

Akamai Plans Infrastructure Investment

Alongside the Anthropic agreement, Akamai disclosed a hardware supply arrangement with Lenovo and contract manufacturer Jabil covering approximately $1.7 billion of memory components.

The procurement forms part of the infrastructure required to support the cloud services commitment.

According to the supplied information, Akamai expects approximately $5.5 billion of total capital expenditure associated with the initial Anthropic commitment.

The scale and timing of that spending, together with the revenue ultimately generated under the agreement, will affect the financial contribution of the contract over its seven-year term.

Anthropic Receives Warrant for Preferred Stock

As part of the agreement, Akamai issued Anthropic a warrant covering non-voting convertible Series B preferred stock.

The warrant represents up to approximately 5% of Akamai’s outstanding common shares, with vesting linked to contract milestones over the seven-year agreement.

The potential equity interest will therefore depend on the relevant contractual conditions being met.

TD Cowen Raises Akamai Price Target

Following the announcement, TD Cowen increased its price target for Akamai to $149 while maintaining a Hold rating on the shares.

The firm said the Anthropic agreement highlights constraints in available computing capacity for artificial intelligence workloads and Akamai’s ability to compete for workloads that have historically been handled by large hyperscale cloud providers.

The price target and rating represent TD Cowen’s assessment and are not guarantees of future share-price performance.

Akamai Shares Advance in Premarket Trading

Akamai’s premarket increase followed relatively limited moves in the broader US equity market on Thursday. The S&P 500 and Nasdaq finished close to unchanged, while the Dow Jones declined approximately 0.3%.

The 10-year US Treasury yield moved above 5.1%, close to its highest level since 2007.

Akamai’s shares were trading above their 52-week low of $70.82 following the announcement. The stock’s 52-week high was $165.45, according to the supplied information.

The Anthropic agreement provides Akamai with a seven-year contractual commitment, while its ultimate financial contribution will depend on factors including Anthropic’s usage, the potential expansion of the arrangement, associated infrastructure spending and the terms of the agreement.

Akamai Technologies stock price