HSBC Just Downgraded Akamai Technologies Stock. Here’s Why.

Akamai Technologies (AKAM) investors just received a more cautious signal from Wall Street. HSBC downgraded the stock from “Buy” to “Hold” and slashed its price target from $171 to $123, pointing to concerns about weaker-than-expected cloud infrastructure margins, slower earnings growth and elevated capital spending.

Akamai’s Q2 revenue rose to $1.1 billion, but non-GAAP operating profit fell short of HSBC’s estimate, while operating margin declined to 25% and EPS dropped 8% to $1.59.

Although HSBC expects strong artificial intelligence (AI)-driven demand to fuel rapid cloud infrastructure growth, it now forecasts lower margins and 8.5% annual EPS growth through 2028, below the sector’s 10%-15% range. The bank also expects capex to average 36% of revenue through 2028, prompting it to reduce Akamai’s valuation multiple to 17x estimated near-term non-GAAP EPS from 25x.

With the stock’s AI-driven growth story facing tougher expectations, it’s worth weighing whether Akamai’s long-term opportunity can justify the near-term pressure on profitability.

About Akamai Stock

Akamai Technologies is a cloud computing and cybersecurity company best known for its global content delivery network (CDN), edge computing infrastructure, and internet security solutions. Founded in 1998 and headquartered in Cambridge, Massachusetts, the company serves enterprises worldwide with services spanning cloud infrastructure, API security, DDoS protection, and AI-ready edge computing platforms.

Once viewed primarily as a legacy internet infrastructure provider, Akamai is increasingly repositioning itself as a next-generation AI and cloud infrastructure player following major investments in distributed computing and large-scale AI workloads. The company currently has a market cap of $16.8 billion.

AKAM stock has delivered a strong overall return over the past year, but the stock has recently lost some momentum. From its 52-week low of $70.82 in November 2025, the shares climbed sharply, helped by growing investor enthusiasm around Akamai’s transition from a traditional content-delivery and cybersecurity company toward an AI-focused cloud infrastructure provider. The stock is up 74.2% from its 52-week low, while its year-to-date (YTD) gain is 41.79%. The stock has delivered 71.89% returns over the past year.

The rally accelerated earlier this year, with AKAM reaching a 52-week high of $165.45 on May 13, 2026. A major catalyst was Akamai’s announcement of a $1.8 billion, seven-year cloud infrastructure commitment from a leading AI company, which helped send the shares sharply higher in May.

However, the stock has undergone a significant correction from that peak, and the latest earnings reaction has added to the pressure. Although Akamai’s second-quarter revenue increased, investors focused on pressured profitability, including lower adjusted EPS and operating margins. The stock fell 6.76% on Aug. 7, reinforcing concerns that the substantial spending required to build AI and cloud infrastructure could weigh on near-term returns. Nevertheless, the stock rebounded by 6.43% in the following session.

AKAM’s long-term performance remains impressive owing to Akamai’s potentially huge AI opportunity, but the recent volatility reflects questions about how profitably and efficiently the company can monetize that opportunity.

AKAM currently trades at a premium compared to the sector median and its own historical average at 28.26 times forward price-to-earnings.

Mixed Financial Performance

Akamai Technologies reported its second-quarter 2026 results on Aug. 6, delivering revenue broadly in line with expectations but showing continued pressure on profitability as the company invests heavily in cloud infrastructure and AI capacity.

For the quarter ended June 30, revenue increased 5% year-over-year (YOY) to $1.1 billion. The growth was driven primarily by Akamai’s newer cloud and security businesses. Cloud Infrastructure Services revenue surged 39% YOY, highlighting strong demand for AI-related infrastructure, while Security revenue increased 10% to $604 million. By contrast, the company’s more mature delivery and cloud applications business remained a drag on overall growth.

The key concern in the report was profitability. Akamai generated $271 million in non-GAAP operating income, down 12% from the year-ago quarter, while its non-GAAP operating margin contracted five percentage points to 25%. Non-GAAP EPS declined 8% to $1.59 from $1.73. The margin deterioration reflects the changing revenue mix as Akamai expands its lower-margin cloud infrastructure operations, along with higher costs associated with building out data-center and GPU capacity.

The company nevertheless highlighted significant demand for its cloud infrastructure platform. Akamai secured more than $2.8 billion of cloud infrastructure commitments, including a new $600 million, four-year contract to support robotics workloads. The company believes its globally distributed network gives it an advantage in AI inference and other latency-sensitive workloads.

Akamai also provided updated guidance. For the third quarter, management expects revenue of approximately $1.105 billion to $1.130 billion and non-GAAP EPS of $1.60 to $1.80. For full-year 2026, the company is guiding to revenue of $4.445 billion to $4.530 billion and non-GAAP EPS of $6.40 to $7.05, representing a modest narrowing of its previous outlook. The company continues to expect strong cloud infrastructure growth, but the investment required to support that expansion is weighing on near-term margins.

Analysts forecast EPS of $3.91 for fiscal 2026, a 11.3% decline, followed by a 3.8% rise to $4.06 in 2027.

What Do Analysts Expect for Akamai Stock?

In addition to HSBC, some other analysts have also revised their stance on AKAM following the recent earnings release.

Susquehanna lowered its price target on Akamai to $140 from $175 while maintaining a “Positive” rating on the shares. Analyst Shyam Patil said Akamai delivered a generally solid second quarter, and although the company reduced its 2026 outlook, Susquehanna viewed much of the adjustment as related to timing rather than a deterioration in underlying demand trends.

The target cut nevertheless reflects a more cautious view of Akamai’s near-term earnings and profitability following its Q2 results.

On the other hand, Guggenheim maintained its “Buy” rating on Akamai and raised its price target to $190 from $181, signaling continued confidence in the company’s long-term growth opportunity.

Overall, AKAM has a consensus “Moderate Buy” rating. Of the 22 analysts covering the stock, 11 advise a “Strong Buy,” one suggests a “Moderate Buy,” eight analysts are on the sidelines, giving it a “Hold” rating, and two recommend a “Strong Sell.”

AKAM’s average analyst price target of $156.33 suggests an upside of 26.9%, while the Street-high target price of $195 indicates that the stock could rally as much as 58.3%.