Akamai Technologies (NASDAQ:AKAM) expects its cloud infrastructure revenue to more than double in 2027, as it begins delivering on more than $14 billion in multiyear customer commitments signed this year. The forecast comes even as supply chain and data center delays shift some revenue out of the fourth quarter.
Chief Executive Officer Tom Leighton said on the company’s third-quarter earnings call that Akamai expects Cloud Infrastructure Services, or CIS, revenue of $1.1 billion to $1.3 billion in 2027. The company projected total revenue growth of 17% to 22% in constant currency next year and said it expects revenue to exceed $7 billion in 2028.
The commitments include an $11.6 billion, seven-year agreement with Anthropic to support CPU workloads. Two of Akamai’s first three large CIS deals are generating revenue, Leighton said, while the third is expected to begin generating revenue later in the fourth quarter.
Delays Shift Revenue Into 2027
Chief Financial Officer Ed McGowan said supply chain and third-party data center delays affecting two deals will shift approximately $30 million in revenue from the fourth quarter into 2027. The issues have been resolved, he said, and the timing changes will not reduce total contract revenue or trigger penalties.
Leighton described the delays as comparable to a construction project’s punch list and said the company’s 2027 forecast accounts for the possibility of further delays. McGowan expects roughly 25% to 30% of next year’s CIS revenue in the first half and the remainder in the second half.
For the Anthropic agreement, McGowan said Akamai has contracted for all required data center space and power and secured approximately 70% of the necessary hardware, memory and other components. The contract includes a pricing adjustment mechanism intended to protect margins if costs rise for components that have not yet been ordered.
McGowan said the 2028 revenue outlook assumes no additional orders under a $9 billion option associated with Anthropic. Akamai also is not including other multibillion-dollar deals in its forecast or plans, he said, although it plans to have capacity for larger transactions in the several-hundred-million-dollar range.
Quarterly Results and Spending Outlook
Third-quarter revenue rose 6% year over year to $1.122 billion, or 7% in constant currency. CIS revenue increased 34% to $109 million, while security revenue rose 9% to $622 million. Delivery and other cloud applications revenue fell 3% to $391 million.
Non-GAAP net income was $262 million, or $1.77 per diluted share, and the non-GAAP operating margin was 25%. Capital expenditures totaled $464 million, or 41% of revenue.
For the fourth quarter, Akamai projected revenue of $1.145 billion to $1.170 billion and non-GAAP earnings per share of $1.50 to $1.70. It expects capital expenditures of $2.445 billion to $2.645 billion, including approximately $1.7 billion to pre-purchase memory and other critical components for the Anthropic contract.
For the full year, the company forecast revenue of $4.44 billion to $4.465 billion, non-GAAP earnings per share of $6.47 to $6.68 and capital expenditures of $3.462 billion to $3.662 billion.
Margins and Funding
Akamai expects the contracts signed this year to generate approximately $2.2 billion in annual revenue once fully ramped by the end of 2028. At that point, the company estimates an aggregate adjusted EBITDA margin of about 75% and a non-GAAP operating margin of approximately 30% on those deals. McGowan cautioned that the full $2.2 billion would not be recognized throughout 2028 because the contracts will still be ramping.
The company estimates an approximately 13% after-tax internal rate of return and a 15% average annual adjusted return on invested capital for the deals. McGowan said returns on other large deals in the pipeline are, in many cases, significantly higher, reflecting smaller volumes or shorter commitments than Anthropic’s.
Near-term margins face pressure as data center costs arrive ahead of revenue. McGowan said margins could bottom in the first half of 2027, about one percentage point below current levels, before improving. He also expects lease accounting to add one to two percentage points of noncash margin pressure next year.
Akamai plans to fund its expansion through 2028 and address its 2027 convertible note maturity primarily with existing cash and expected operating cash flow, potentially supplemented by financing. The company ended September with approximately $4.2 billion in cash, equivalents and marketable securities. McGowan said Akamai aims to maintain its investment-grade rating, which helps it secure data center space and power.
About Akamai Technologies (NASDAQ:AKAM)
Akamai Technologies, Inc provides cloud, cybersecurity and content-delivery services that help organizations operate and protect applications, websites and digital media over the internet. Its distributed edge platform is designed to deliver online content closer to end users while improving performance, availability and resilience.
The company’s services include content delivery and application performance solutions, cloud computing capabilities, web and application security, distributed denial-of-service protection, bot management and zero-trust security tools.
