TD Cowen raises Akamai stock price target on compute scarcity

TD Cowen upgraded its price target on Akamai Technologies (AKAM) to $149 from $140, while keeping a Hold rating. The stock is currently valued at $110.41, with a market capitalization of $15.87 billion. Despite potential overvaluation relative to its Fair Value estimate, Akamai has achieved a 46% return over the past year. The firm cites a recent contract win as proof that compute scarcity continues to shape the AI infrastructure cycle.

As leading frontier model developers vie for compute capacity, alternative infrastructure providers, including Akamai, are gaining traction in workloads previously handled by hyperscale cloud platforms or direct leasing. However, TD Cowen remains skeptical about the long-term viability of Akamai's cloud infrastructure services business model throughout a full cycle, attributing much of the present demand surge to a significant shortage of compute resources.

The firm highlights Anthropic's growth as constrained by compute availability, creating a favorable environment for infrastructure vendors to secure substantial contracts. As long as compute shortages remain prevalent across the industry, Akamai can maintain its position in cloud infrastructure services and AI infrastructure contracts, although there are long-term concerns about the durability of the model.

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