Akamai Technologies (AKAM): Buy, Sell, or Hold Post Q3 Earnings?

Stock Story

While the S&P 500 is up 13.9% since June 2025, Akamai Technologies (currently trading at $85.26 per share) has lagged behind, posting a return of 8.6%. This may have investors wondering how to approach the situation.

Is now the time to buy Akamai Technologies, or should you be careful about including it in your portfolio? Get the full stock story straight from our expert analysts, it’s free for active Edge members.

Why Do We Think Akamai Technologies Will Underperform?

We're sitting this one out for now. Here are three reasons there are better opportunities than AKAM and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Akamai Technologies’s 5.8% annualized revenue growth over the last five years was weak. This fell short of our benchmark for the software sector.

2. Low Gross Margin Reveals Weak Structural Profitability

For software companies like Akamai Technologies, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

Akamai Technologies’s gross margin is substantially worse than most software businesses, signaling it has relatively high infrastructure costs compared to asset-lite businesses like ServiceNow. As you can see below, it averaged a 59.1% gross margin over the last year. Said differently, Akamai Technologies had to pay a chunky $40.87 to its service providers for every $100 in revenue.

The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. Akamai Technologies has seen gross margins decline by 1.6 percentage points over the last 2 year, which is poor compared to software peers.

Akamai Technologies Trailing 12-Month Gross Margin

3. Long Payback Periods Delay Returns

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

Akamai Technologies’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Akamai Technologies’s products and its peers.

Final Judgment

Akamai Technologies doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 2.9× forward price-to-sales (or $85.26 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better stocks to buy right now. We’d suggest looking at a top digital advertising platform riding the creator economy.

Risk Warnings and Disclaimers

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Dj Akamai Technologies Inc. Stock Slides 3.6%, Underperforms Peers

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Dj Akamai Cloud Achieves Fedramp High Ready Status, Advancing Secure Cloud Solutions For Federal Agencies

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Press Release: Akamai Cloud Achieves Fedramp High Ready Status, Advancing Secure Cloud Solutions For Federal Agencies

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Akamai Cloud Achieves Fedramp High Ready Status, Advancing Secure Cloud Solutions For Federal Agencies

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Q3 Content Delivery Earnings: Fastly (NYSE:FSLY) Impresses

Stock Story

Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Fastly and the best and worst performers in the content delivery industry.

The amount of content on the internet is exploding, whether it is music, movies and or e-commerce stores. Consumer demand for this content creates network congestion, much like a digital traffic jam which drives demand for specialized content delivery networks (CDN) services that alleviate potential network bottlenecks.

The 4 content delivery stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 2.7% while next quarter’s revenue guidance was in line.

Thankfully, share prices of the companies have been resilient as they are up 9.2% on average since the latest earnings results.

Best Q3: Fastly

Taking its name from the core advantage it delivers to customers, Fastly operates an edge cloud platform that processes, secures, and delivers web content as close to end users as possible, enabling faster digital experiences.

Fastly reported revenues of $158.2 million, up 15.3% year on year. This print exceeded analysts’ expectations by 4.7%. Overall, it was an exceptional quarter for the company with EPS guidance for next quarter exceeding analysts’ expectations and a solid beat of analysts’ EBITDA estimates.

Fastly achieved the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is up 44.7% since reporting and currently trades at $11.68.

Is now the time to buy Fastly? Access our full analysis of the earnings results here, it’s free for active Edge members.

Cloudflare

With a massive network spanning more than 310 cities in over 120 countries, Cloudflare provides a global network that delivers security, performance and reliability services to protect websites, applications, and corporate networks.

Cloudflare reported revenues of $562 million, up 30.7% year on year, outperforming analysts’ expectations by 3.2%. The business had an exceptional quarter with a solid beat of analysts’ billings estimates and EPS guidance for next quarter exceeding analysts’ expectations.

Cloudflare pulled off the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 9.3% since reporting. It currently trades at $201.26.

Is now the time to buy Cloudflare? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: F5

Originally named after the F5 tornado, the most powerful on the meteorological scale, F5 provides security and delivery solutions that protect applications across cloud, data center, and edge environments for large organizations.

F5 reported revenues of $810.1 million, up 8.5% year on year, exceeding analysts’ expectations by 2%. Still, it was a slower quarter as it posted full-year EPS guidance missing analysts’ expectations significantly and revenue guidance for next quarter missing analysts’ expectations significantly.

As expected, the stock is down 18% since the results and currently trades at $238.01.

Read our full analysis of F5’s results here.

Akamai Technologies

With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.

Akamai Technologies reported revenues of $1.05 billion, up 5% year on year. This print topped analysts’ expectations by 1%. Overall, it was a very strong quarter as it also produced EPS guidance for next quarter exceeding analysts’ expectations and full-year EPS guidance exceeding analysts’ expectations.

Akamai Technologies pulled off the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates among its peers. The stock is up 19.4% since reporting and currently trades at $87.19.

Read our full, actionable report on Akamai Technologies here, it’s free for active Edge members.

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