TLDR
- Akamai stock rose 3% on Friday after news of an expanded partnership with Anthropic.
- Anthropic committed $11.6 billion over seven years for Akamai’s cloud infrastructure.
- The deal could grow to $20 billion in total value.
- Anthropic also got a warrant to buy up to 5% of Akamai’s stock.
- Multiple Wall Street firms raised their price targets on Akamai following the news.
Akamai Technologies stock climbed 3% on Friday. The move came after the company announced an expanded deal with AI model maker Anthropic.
Akamai Technologies, Inc., AKAM
The agreement is worth $11.6 billion over seven years. It covers cloud infrastructure capacity that Anthropic will use for its AI operations.
The deal has room to grow. It could expand by another $9 billion, pushing the total value to roughly $20 billion.
Akamai shares were trading at $113.94 after the news broke. The stock has a 52-week range of $70.82 to $165.45.
What Akamai Is Providing
Akamai said its infrastructure will support Anthropic’s CPU workload needs. This points to a shift in AI computing demand.
Model training has traditionally leaned on GPUs. But running trained models, known as inference, is increasingly relying on CPU power instead.
For comparison, Akamai had already disclosed $2.8 billion in multi-year cloud customer commitments back in its Q2 earnings release in August.
Akamai CEO Tom Leighton commented on the deal. He said the company’s global footprint and enterprise experience position it to support secure AI workloads.
Anthropic Gets a Stake in Akamai
As part of the arrangement, Anthropic received a warrant. It allows the company to buy convertible preferred stock equal to about 5% of Akamai’s outstanding shares.
The purchase price is set at $111.33 per share. A 2% portion of that warrant vested immediately when the deal was announced.
The rest vests only if Anthropic expands its commitment further. Each additional $3 billion in spending unlocks another 1% of the warrant.
Wall Street responded quickly to the announcement. RBC Capital kept a Sector Perform rating and set a $135 price target.
RBC raised its revenue and capital expenditure forecasts for Akamai. The firm called the deal validation of Akamai’s AI infrastructure strategy.
Other analysts were more bullish. Piper Sandler raised its target to $158, BofA Securities to $185, and Guggenheim to $225.
Evercore ISI kept a $175 target with an Outperform rating. UBS moved its target up to $148.
Piper Sandler and Guggenheim both maintain Buy ratings on the stock. Evercore ISI’s rating stayed at Outperform as well.
The deal is expected to generate about $1.66 billion in annual recurring revenue for Akamai. That would be a meaningful addition to its cloud and infrastructure segment.
Akamai stock has returned 46% over the past year, according to InvestingPro data. The stock currently trades at a P/E ratio of 41.1.
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