Shares of Akamai Technologies (AKAM) surged on Wednesday after Bank of America upgraded the cloud computing company, citing growing confidence in its transformation into an artificial intelligence infrastructure provider.
Akamai shares climbed more than 7% during the session to around $160, making the stock one of the top performers in the S&P 500.
The rally pushed the shares close to their highest closing level since March 2000, according to Dow Jones Market Data.
The gains followed a bullish research note from Bank of America analyst Tal Liani, who upgraded the stock to Buy from Neutral and raised his price target to $175 from $130.
“The story has shifted from a legacy delivery network to a credible AI infrastructure platform,” Liani wrote Wednesday. “Large cloud infrastructure wins, including a $1.8 billion, 7-year deal, signal real demand for distributed AI, not just narrative.”
$1.8 Billion AI infrastructure deal draws attention
At the center of investor enthusiasm is a recently disclosed $1.8 billion infrastructure agreement that analysts view as a major validation of Akamai’s AI ambitions.
Last week, Akamai announced that a “leading frontier model provider” had committed $1.8 billion for its cloud infrastructure services over seven years.
Bloomberg later reported that the customer was AI startup Anthropic, though neither company publicly confirmed the report.
Bank of America estimates the agreement will contribute between $20 million and $25 million in quarterly revenue beginning in the fourth quarter.
Analysts said the deal highlights increasing enterprise demand for distributed AI computing and edge inference workloads, areas where Akamai is attempting to expand beyond its legacy content-delivery network business.
Liani added that Akamai’s Cloud Infrastructure Services segment “is at an inflection point with ‘momentum supported by AI workloads and edge inference use cases.’”
The company’s Cloud Infrastructure Services business is currently growing around 40% year over year, according to Bank of America estimates.
AI expansion offsets legacy business weakness
Akamai’s traditional delivery business continues to face pressure, with revenue from the segment declining 7% from a year earlier.
However, analysts believe accelerating AI infrastructure demand could offset those declines over time.
Bank of America now expects Akamai’s overall revenue growth to accelerate to 11.4% in 2027 from 8.2% in 2026.
The brokerage also forecasts earnings per share rising to $9.03 by 2028 from an estimated $6.93 in 2026.
The firm argued investors are increasingly recognizing Akamai’s potential to compete in hybrid edge-and-core computing markets alongside larger cloud providers.
The improving outlook has fueled a sharp rally in the stock.
Akamai shares have surged 54% in May and are now up roughly 81% for the year.
Despite the gains, the stock remains well below its all-time closing high of $327.62 reached in December 1999.
Analysts see long-term opportunity despite risks
Bank of America acknowledged that Akamai’s AI expansion will require substantial investment.
The brokerage estimates capital expenditures could rise to as much as $825 million over the next 12 months as the company expands infrastructure capacity.
As a result, free cash flow is projected to decline nearly 48% in 2026 before recovering in subsequent years.
Even so, Wall Street sentiment toward the company has improved notably following the infrastructure deal and stronger-than-expected first-quarter earnings reported last week.
Analysts at Morgan Stanley said the earnings report was overshadowed by the $1.8 billion agreement, which they described as evidence that Akamai is becoming more firmly tied to the AI growth story.
Morgan Stanley currently maintains an Overweight rating on the stock.
According to FactSet data, 29 analysts covering Akamai currently hold an average Overweight rating on the shares, with a consensus price target of $155.46.
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