STOCKS | Piper Sandler Upgrades Akamai on Faster Compute Growth Outlook

Piper Sandler raised Akamai's rating from Neutral to Overweight and lowered its price target to $125. According to Sina Finance, analyst James Fish said in a Monday note that Akamai will need to increase capital spending to meet market demand for its compute business, but those investments should deliver long-term growth returns. Fish said the compute business is approaching a meaningful turning point, with growth set to accelerate and earnings expectations for the segment finally having been cut enough. He added that order commitments above $2.8 billion provide some visibility, the project pipeline is ample, and Akamai's added compute capacity could be about 100 megawatts above his current model. Fish also said the market is currently too conservative on the company's revenue expectations, while rising application security demand and higher renewal contract prices could become catalysts for the stock.