Akamai rises as Raymond James upgrades on Anthropic boost

• Akamai (AKAM) shares rose 2% in premarket trading on Tuesday as Raymond James upgraded the content delivery network provider, citing a revenue boost from its deal with Anthropic (ANTHRO).
• “We are upgrading shares of Akamai to Strong Buy from Outperform following the 'AI is Dead' trade last week, which was fueled by credit risks and fears from higher rates,” analyst Frank Louthan wrote in a note to clients. “We believed this impacted AKAM in particular as it faces a $5.5 billion capital commitment to generate over $11 billion in revenue from Anthropic—a high profile AI frontier model company. We believe the pullback creates a compelling long-term opportunity.”
• Delving deeper, Louthan, who kept his $170 price target on Akamai despite the upgrade, said investors' main concern about the deal was the cost of capital relative to the return on invested capital expectations. “Now that the macroeconomic outlook has shifted, and it appears that rates will rise, that has negatively impacted AKAM trading,” Louthan added. “Secondly, the market is probably concerned about broader AI firms (like Anthropic) being able to stay funded to maintain their obligations like the recent deal with AKAM. So in the short term, we believe AKAM is getting beaten up as it is providing funding for a deal that now could be viewed as having a lower probability of being fulfilled.”

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