Morgan Stanley resets Akamai stock price target amid sell-off | Louis Velazquez - Official Website, Entrepreneur, Finance, Technology

Wall Street is watching Akamai Technologies closely after a blockbuster deal reshaped the company’s growth story earlier this year.

Morgan Stanley reaffirmed its “Overweight” rating on Akamai (AKAM) in a July 27 research note shared with me, keeping its price target at $165, roughly 48% above the stock’s July 28 close of $111.

Valued at a market cap of $16.1 billion, AKAM stock is down 31% from all-time highs.

Analysts Sanjit Singh and Adam Wood say the company’s multi-year acceleration story remains intact, even though they expect a quieter second quarter than some investors are hoping for.

The note lands ahead of Akamai’s second-quarter earnings report and previews what analysts expect from the cloud and security company as it leans deeper into artificial intelligence infrastructure.

Why the $1.8B deal is key for Akamai

Akamai has spent decades building one of the internet’s largest content delivery networks, the system that helps websites and apps load quickly no matter where a user is located.

In recent years, the company has expanded into cybersecurity and, more recently, cloud computing built around AI workloads.

That shift became impossible to ignore on Akamai’s first-quarter earnings call in May, when CEO Tom Leighton announced a seven-year, $1.8 billion commitment from what the company called a leading frontier model company.

It is the largest customer contract in Akamai’s history and follows a $200 million cloud infrastructure deal signed just months earlier with another major tech company.

Chief Financial Officer Ed McGowan told analysts on the call:

“This is a powerful validation of the Akamai value proposition in the age of AI and a clear indicator of the scale at which we can operate.”

Akamai’s Cloud Infrastructure Services segment, which includes this AI compute business, grew 40% year over year in the first quarter to $95 million.
Total company revenue came in at $1.074 billion, up 6% as reported.
Security revenue grew 11%, while the older delivery business continued to shrink as expected.

Leighton also described a shift in customer urgency around cybersecurity, driven by fears that attackers will use AI to find new vulnerabilities faster than companies can patch them.

“I don’t think I’ve ever seen the CISOs more agitated and feeling more of a sense of urgency than they are now,” Leighton said, referring to chief information security officers at major companies.

Tom Leighton, CEO and co-founder of Akamai is optimistic on steady demand

Bloomberg/Getty Images

Morgan Stanley expects a quieter Q2

Despite the excitement around the $1.8 billion deal, Morgan Stanley is telling clients not to expect a repeat announcement of that size in the near term.

The firm’s analysts project Cloud Infrastructure Services revenue of $99 million in the second quarter, representing about 39% growth. That is below the 43% growth rate that Wall Street consensus currently expects.

Akamai told investors it expects the new $1.8 billion customer to start generating meaningful revenue in the fourth quarter, contributing an estimated $20 million to $25 million during that period.

It means most of the deal’s financial impact will not show up until later this year, leaving the second and third quarters looking more like business as usual.

Morgan Stanley’s model shows Cloud Infrastructure Services growth needing to reach roughly 67% in the fourth quarter to hit the company’s full year target of at least 50% growth.

That sounds aggressive on paper, but the analysts point out that stripping out the two large disclosed customer contracts, the underlying business only needs to grow about 26% in that same period, a bar they consider achievable given current momentum.

The firm also modestly trimmed its full-year 2026 revenue estimate to $4.48 billion from $4.5 billion, mostly due to softer expectations in the legacy delivery business, which continues to face pricing pressure and competition from larger cloud providers.

What next for AKAM stock?

Morgan Stanley’s base case assumes Akamai stock trades around 24 times projected 2027 earnings per share of $6.72, supporting that $165 target.

The firm’s bull case of $205 assumes Cloud Infrastructure Services continues to accelerate and reach around $5 billion in revenue by 2027.

Its bear case of $99 assumes revenue recognition timing weighs on margins and free cash flow while the delivery business declines faster than expected.

Wall Street forecasts Akamai to expand adjusted earnings per share from $6.72 in 2026 to $9.88 in 2030.

If AKAM stock is priced at 19.4x forward earnings, which is similar to its 10-year average, it could return 73% within the next four years.

More Wall Street:

Out of the 21 analysts covering AKAM stock, 13 recommend “Buy”, seven recommend “Hold”, and one recommend “Sell”. The average Akamai stock price target is $163, 46% above the current price.

Analysts noted that checks with industry partners remain constructive, pointing to steady demand across web application firewall, bot management, and zero trust security products.

They flagged Guardicore, Akamai’s network segmentation tool, as an area of more mixed feedback since companies are prioritizing other security budget categories right now.

For everyday investors, the key takeaway is patience.

Akamai’s next major growth chapter is largely backloaded to the back half of 2026, and Wall Street will be watching closely for proof that the company can convert its expanding pipeline of AI infrastructure customers into steady, recurring revenue.