Akamai's $7bn target rests on $14bn of cloud commitments

By Rebecca Stone

Akamai expects total revenue to exceed $7 billion in 2028, driven by cloud infrastructure services as the edge and cloud vendor builds CPU-based AI capacity for Anthropic and other global customers.

In the latest quarter, Akamai generated $1.122 billion in revenue, up 6% year on year. Cloud infrastructure revenue rose 34% to $109 million, making it the company's fastest-growing segment. Management forecasts cloud revenue of $1.1 billion to $1.3 billion in 2027 and total company growth of 17% to 22%.

At the earnings call last week, CEO Tom Leighton said: "As cloud infrastructure services become a larger portion of our revenue, we expect it to have a strong positive impact on our margins and EPS growth." EPS refers to earnings per share.

The segment remains a small part of quarterly sales, so the 2027 range and 2028 target require a substantial change in the revenue mix. Akamai did not disclose cloud's absolute margin contribution or a year-by-year path to $7 billion.

What does the $14bn commitment book contain?

Three points define the contract position:

• Akamai recently signed an $11.6 billion contract with Anthropic. CFO Ed McGowan said approximately 70% of the hardware, memory and other components needed to deliver it had been secured, but gave no delivery date for the remainder.
• Leighton said multiyear cloud infrastructure services commitments signed this year exceeded $14 billion. The total includes the May Anthropic agreement, the $11.6 billion contract, two large deals with unnamed AI companies, and numerous multimillion-dollar agreements with major enterprises worldwide.
• Two of the three large deals already generate revenue; the third is expected to commence in Q4 2026.

Akamai expects about $22 million in revenue per megawatt of contracted power. McGowan described that figure as a floor for large, long-term contracts, which typically carry favorable terms for customers. The rate provides a planning metric rather than recognized revenue, and Akamai gave no contract-by-contract start dates beyond the third large deal.

Can the buildout arrive on schedule?

Akamai has encountered modest supply-chain and third-party data-center delays on two contracts. Management consequently expects Q4 revenue to fall short of its previous expectation. Leighton said the shortfall "won't impact our outlook for 2027." The statement protects the annual forecast, although the delayed revenue remains unquantified.

Q3 2026 capital expenditure came in below expectation at $464 million. Q4 spending is planned to jump to $2.445 billion-$2.645 billion, including $1.7 billion for the Anthropic contract. That planned Q4 outlay is more than twice the $1.122 billion in revenue generated in the latest quarter.

What do the backbone and CPU strategy change?

Leighton said Akamai's existing backbone allows it to install compute at more, smaller locations faster than competitors that concentrate capacity at fewer large sites. That is Akamai's deployment claim; the results include no independent deployment-time, throughput or utilization benchmark.

The company focuses on inference workloads and training for enterprise-sized models that are primarily CPU-powered. Akamai argues CPUs are less expensive and use less power, which benefits the company. CPU capacity under the cited contracts is currently leased out for seven years, although Akamai did not provide utilization, early-termination or contract-specific ramp details.

Can margins recover after the ramp?

Akamai's latest non-GAAP operating margin was 25%, down six percentage points year on year, while adjusted EBITDA fell 5% to $435 million. Management expects the operating margin to exceed 30% once the large contracts are fully ramped.

McGowan said colocation costs arrive ahead of revenue, long-term colocation commitments carry price escalators, and straight-line treatment can create a noncash charge because the booked cost exceeds what Akamai pays for colocation. Management presents that charge as an accounting consequence of the buildout, but the promised improvement still depends on delayed contracts starting and ramping on schedule. No separate calendar date was given for the above-30% margin.

How is Akamai financing the buildout?

After the earnings call, Akamai announced plans to offer $1.1 billion in convertible senior notes due in 2028 and $1.1 billion in convertible senior notes due in 2031. Initial purchasers received options to buy an additional $150 million of each tranche.

The notes add a financing leg to a buildout already supported by large multiyear commitments and planned data-center spending. Akamai did not specify, in the earnings material, how much of the Q4 capital plan the notes would fund or how quickly the contracted revenue would offset depreciation, colocation expenses and other costs.

The next hard checkpoint comes in Q4 2026: Akamai plans $2.445 billion-$2.645 billion of capital expenditure, expects the third large contract to start and must convert two delayed deployments into revenue without changing the 2027 outlook.