AKAM: Is This the Time to Buy Puts on Akamai?

Akamai provides solutions to build, secure, and accelerate applications and digital experiences. Its core offerings include security, delivery, and compute services. The security solutions safeguard data, applications, and infrastructure from cyberattacks, featuring web application and API protection, bot management, and microsegmentation through the 'Akamai Guardicore Platform'. The compute services encompass cloud computing infrastructure, including virtual machines, storage, and databases, following the acquisition of 'Linode'. Delivery solutions focus on web and mobile performance, and media delivery, optimizing response times and improving end-user experience. Akamai's customers include global enterprises and government agencies. The company differentiates itself through its massively distributed global network, sophisticated technology, comprehensive service offerings, and expertise, providing industry-leading reliability and scale.

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AKAM's technical outlook is bearish, showing a clear downward trend over the past 90 days. The stock has declined from approximately $80 in late June to $71.97 as of November 4th. It's trading below its 21-day EMA of $74.89 and its 50-day SMA of $76.07, while the 200-day SMA is $80.08. The MACD at -0.389 is below its signal line, and the RSI of 47.83 suggests further potential downside. The stochastic oscillator shows the %K at 53.85, while %D is at 46.31. The ADX is at 15.08. The price recently broke below the lower Bollinger Band, indicating oversold conditions, but this also often precedes continued downward momentum. Recent price action confirms a bearish trend, with lower highs and lower lows dominating the chart. Given these signals, the stock is likely to continue its decline over the next 1-3 months. There is resistance at the 50-day SMA and the previous support level around $74, which could act as resistance now.

Akamai's MD&A reveals a mixed but generally stable financial performance. Total revenue increased by 7% to $1,043.5 million for the three months ended June 30, 2025, driven by 'continued growth in sales of our security and cloud computing solutions', offsetting a decline in delivery solutions due to pricing pressures and some customers opting for 'do-it-yourself' solutions. The gross profit margin is not explicitly stated but can be derived from the provided data. Cost of revenue was 41% of revenue for both the current and prior year, indicating a stable gross profit margin. Net cash provided by operating activities decreased to $710.3 million for the six months ended June 30, 2025, from $782.8 million in the same period of 2024, due to the 'timing of customer collections and severance payments'. The company expects cost of revenue to increase for the remainder of 2025, particularly in 'co-location fees and depreciation of network equipment', driven by investments in cloud computing. Management anticipates no significant increases in sales and marketing or general and administrative expenses. Overall, the outlook is cautiously optimistic, with a focus on security and cloud computing growth, tempered by macroeconomic headwinds and cost management.

Akamai's Q2 2025 earnings call projects a moderately bullish outlook. The company reported strong Q2 results with revenue at $1.043 billion, up 7% year-over-year, and non-GAAP EPS at $1.73, $0.15 above guidance. Management expressed confidence, with CEO Leighton stating, 'I'm pleased to report that Akamai had an excellent second quarter with results coming in above our guidance.' Cloud Infrastructure Services (CIS) revenue grew 30% year-over-year, and is expected to accelerate, driving compute revenue. Security revenue also performed well, up 11% year-over-year, driven by API security and Zero Trust solutions, with combined revenue up 48%. Delivery revenue declined 3% year-over-year, but was 'well above our expectations' due to improved pricing and traffic growth. While compute growth for 2025 may be 'a little less than our goal of approximately 15%,' the company expects CIS ARR growth in the range of 40% to 45% by year-end. Full-year revenue guidance is $4.135 billion to $4.205 billion, up 4% to 5%, with non-GAAP EPS expected between $6.60 and $6.80. The inclusion of TikTok revenue in guidance and strength across the board contribute to the positive outlook.

AKAM's financial performance presents a moderately positive picture. Revenue has shown a general upward trend, increasing from $986.97M in Q1 2024 to $1043.494M in Q2 2025, indicating consistent top-line growth. The gross profit ratio has remained relatively stable, fluctuating between 0.587 and 0.604, with the latest quarter at 0.591, suggesting consistent profitability in core operations. Operating cash flow is strong, with $459.149M generated in the most recent quarter, highlighting the company's ability to generate cash from its operations. Total debt has increased from $4.572B in Q1 2024 to $5.271B in Q2 2025, indicating increased leverage, although this may be due to strategic investments or acquisitions, this should be monitored closely. Overall, the combination of revenue growth, stable profitability, and positive operating cash flow suggests a healthy financial trajectory, although the increasing debt levels warrant careful observation.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.