Akamai Leaves Analysts Concerned Following Aggressive Shift To Computing, A Field Dominated By AWS, Azure, GCP

RBC Capital analyst Rishi Jaluria downgraded Akamai Technologies Inc AKAM from Outperform to Sector Perform and reduced the price target from $100 to $85.
The re-rating reflected the shift from Security mix-shift to Compute mix-shift as Security growth slowed.
The analyst already had some skepticism post the Linode acquisition.
Still, now Akamai seems to be going all-in on Compute, significantly growing its CapEx (21% of CY23E revenue) and re-allocating ~1,000 employees (10% of the headcount) to Compute.
It seems as if Akamai is trying to compete directly with the big hyperscalers Amazon.Com Inc AMZN AWS, Microsoft Corp MSFT Azure, Alphabet Inc GOOG GOOGL Google Cloud Platform mostly on price, which is a challenging value proposition considering their deep moat.
Akamai would no longer be a significant cash generator with this seemingly all-in move.
Needham analyst Alex Henderson also reiterated a Hold on similar grounds.
Price Action: AKAM shares traded lower by 9.69% at $79.28 on the last check Wednesday.