Akamai launches Cloud Inference for efficient AI

CAMBRIDGE, Mass. - Akamai Technologies, Inc. (NASDAQ: AKAM), a $12.25 billion market cap technology company with annual revenues of nearly $4 billion, has introduced a new service, Akamai Cloud Inference, aimed at enhancing the efficiency of artificial intelligence (AI) applications by leveraging its globally distributed cloud platform. According to InvestingPro data, the company maintains strong financial health with robust profit margins of ~59% and steady revenue growth of 4.7% over the last twelve months. The service is designed to improve the performance of predictive and large language models (LLMs) in real-world applications, offering significant improvements in throughput and latency while reducing costs.

Akamai Cloud Inference addresses the challenges of centralized cloud models by enabling AI inference - the process of applying trained models to new data - to take place closer to users and devices, at the edge of the network. This approach is intended to overcome the limitations faced by legacy cloud infrastructures in handling AI data.

The solution offers a suite of tools for platform engineers and developers, including a versatile compute arsenal featuring CPUs, GPUs, and ASIC VPUs, a cutting-edge data fabric for AI workloads, and containerization for AI workloads with Kubernetes. Additionally, Akamai has partnered with Nvidia and VAST Data to optimize performance and streamline data access for AI inference tasks.

Akamai’s Chief Operating Officer and General Manager of Cloud Technology Group, Adam Karon, emphasized the importance of Akamai’s distributed platform in the future of AI, stating that while training of LLMs will continue in large data centers, the actionable work of inferencing will benefit from the platform’s edge capabilities.

The service runs on Akamai Cloud, which is capable of delivering over one petabyte per second of throughput and comprises more than 4,200 points of presence across over 1,200 networks in more than 130 countries. This extensive reach allows Akamai to provide compute resources from cloud to edge, enhancing application performance and scalability. InvestingPro analysis suggests the company appears undervalued at current levels, with analysts setting a consensus target implying 26% upside potential. For detailed valuation metrics and additional insights, check out the comprehensive Pro Research Report available on InvestingPro.

As AI adoption matures, enterprises are shifting focus from the training of general-purpose LLMs to the inference stage, where AI is applied to make faster, smarter decisions. This shift is driving a demand for distributed cloud and edge architectures, which can provide real-time insights and support operational intelligence use cases in various industries.

The launch of Akamai Cloud Inference marks a significant step for the company in its efforts to power and protect business online, offering enterprises a more efficient and cost-effective way to manage and improve their operations with AI. With an EBITDA of $1.12 billion and strong free cash flow yield, Akamai demonstrates solid financial fundamentals to support its AI initiatives. InvestingPro subscribers have access to over 30 additional financial metrics and analysis tools to evaluate Akamai’s growth potential in the evolving AI landscape.

This article is based on a press release statement from Akamai Technologies, Inc.

In other recent news, Akamai Technologies announced the launch of its Cloud Accelerated Compute Instances, leveraging NETINT’s video processing units (VPUs) to enhance media transcoding efficiency. This move positions Akamai as the first cloud provider to integrate VPUs, potentially reducing operational costs and improving video streaming services. Meanwhile, Oppenheimer has assumed coverage of Akamai, issuing an Outperform rating with a $100 price target, citing a favorable outlook for the company’s growth in its Security and Compute portfolio. Guggenheim also reaffirmed its Buy rating, maintaining a $133 price target, expressing confidence in Akamai’s strategy to expand its market leadership in Content Delivery Network (CDN) services into Security and Cloud solutions.

However, S&P Global Ratings revised Akamai’s outlook to negative due to rising leverage, with the company’s debt levels reaching $3.5 billion in 2024. The increased leverage is attributed to acquisitions, capital expenditures, and restructuring costs, which have impacted profitability. Despite these financial challenges, Akamai’s strategic focus on cloud and security markets suggests potential for long-term growth. Additionally, CEO F. Thomson Leighton purchased approximately $3 million of the company’s stock, a move often seen as a strong vote of confidence in the company’s prospects. This insider purchase has been interpreted by the market as a positive indicator, reflecting potential optimism about Akamai’s future performance.

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