Morgan Stanley Maintains Overweight Rating on Akamai Amid AI Deal and Market Sell-Off
Morgan Stanley has reaffirmed its 'Overweight' rating for Akamai Technologies (AKAM) despite a 31% decline from all-time highs. In a July 27 research note, analysts Sanjit Singh and Adam Wood highlighted that the company's long-term growth story remains intact due to recent large AI infrastructure deals. The $1.8 billion contract with an unnamed frontier model firm is seen as validation of Akamai’s value proposition in the age of artificial intelligence. The deal marks a significant shift for Akamai, which has expanded from content delivery networks into cybersecurity and cloud computing. CEO Tom Leighton emphasized growing urgency around AI-driven cyber threats during Q1 earnings calls. While Morgan Stanley expects slower growth in Q2 compared to expectations, it anticipates the new contract will begin contributing meaningfully by Q4. Analysts project Cloud Infrastructure Services revenue of $99 million for Q2 and believe Akamai can meet its full-year 50% growth target if underlying business momentum continues. The firm maintains a price target of $165, about 48% above the July 28 closing stock price.
