From Nasdaq: 2024-11-10 23:51:26

Akamai (NASDAQ:AKAM) stock plummeted 14% after reporting Q3 earnings that met expectations but raised concerns with weaker Q4 guidance. The core content delivery network (CDN) business continues to decline, impacting margins. However, newer security and cloud computing businesses show promise. Akamai’s revenue guidance was lowered, but the stock looks oversold.

Akamai’s CDN sales fell 16% due to competition from cloud providers and customers moving operations in-house. Margins were impacted as legacy business shrinks. Security business revenues surged 14%, showing growth potential. Akamai’s focus on API security and recent acquisitions position it well to benefit from the growing cybersecurity market.

Akamai’s cloud computing business, bolstered by the acquisition of Linode, grew 28% in Q3. Investors worry about increased capital spending to scale the business. Akamai stock has been volatile, outperforming the S&P 500 in some years. The stock’s performance depends on the company’s ability to execute its cloud and security strategy.

Despite Akamai’s declining CDN business, its compute and security segments now contribute 70% to total revenue. The stock trades at a reasonable multiple compared to rivals like Cloudflare. Akamai’s non-CDN businesses grew 17% in the most recent quarter, showing potential for higher valuation. Analysts estimate a 33% upside for AKAM stock. 1. The stock market reached new heights today as the S&P 500 closed at a record high of 3,800, driven by positive earnings reports from major tech companies.

2. In other news, the unemployment rate dropped to 6.7% in December, with 140,000 new jobs added to the economy, signaling a slight improvement in the labor market.

3. Researchers have discovered a new strain of the coronavirus in the UK, which is said to be more contagious than previous strains. Health officials are closely monitoring the situation and urging the public to remain vigilant.

4. President-elect Joe Biden unveiled a $1.9 trillion economic relief plan, which includes direct payments to Americans, increased unemployment benefits, and funding for vaccine distribution efforts to combat the ongoing pandemic.



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