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A Look At Akamai Technologies (AKAM) Valuation After Mixed Short And Long Term Shareholder Returns

Simply Wall St · 6d ago

Akamai Technologies (AKAM) is back in focus after recent share price moves, as investors weigh its role in security, delivery, and cloud computing against the stock’s mixed short and longer term return profile.

See our latest analysis for Akamai Technologies.

The recent 1 day share price return of 3.29% to US$88.74 sits on top of a 90 day share price return of 15.67%, even as the 1 year total shareholder return of 4.11% decline and 5 year total shareholder return of 12.73% decline point to fading longer term momentum.

If Akamai’s move has you thinking about what else is happening in tech, this is a good moment to scan high growth tech and AI stocks for other potential ideas.

With Akamai trading at US$88.74 and sitting at an estimated 28% discount to one intrinsic value estimate, yet showing a 5 year total shareholder return decline of 12.73%, you have to ask: is there genuine upside here, or is the market already pricing in future growth?

Most Popular Narrative: 6.8% Undervalued

With Akamai closing at US$88.74 against a narrative fair value of US$95.20, the current gap sets up a clear valuation debate for investors.

Analysts are assuming Akamai Technologies's revenue will grow by 6.1% annually over the next 3 years.

Analysts assume that profit margins will increase from 10.4% today to 15.7% in 3 years time.

Read the complete narrative.

Curious how steady mid single digit revenue growth and a step up in margins can still justify a richer earnings multiple than today, even with share count falling?

Result: Fair Value of $95.20 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks around declining CDN revenue and heavy compute investment needs mean that slower customer ramp or weaker demand could quickly challenge this underpriced upside story.

Find out about the key risks to this Akamai Technologies narrative.

Build Your Own Akamai Technologies Narrative

If you look at this and see the story differently, or just want to test your own assumptions with the same tools, you can build a custom narrative in under a few minutes: Do it your way.

A great starting point for your Akamai Technologies research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Ready for more investment ideas?

If Akamai has sparked your curiosity, do not stop there. The screener can quickly surface fresh ideas that might suit your style and risk tolerance.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.