Akamai Technologies, Inc. AKAM is witnessing solid momentum in the security segment. Revenues from the Security Technology Group were $589.8 million compared with $530.7 million in the year-ago quarter. Segment revenues beat our estimate of $578.2 million.
The 11% year over year growth is driven by multiple factors. Strong demand for web application firewall (WAF) remains a major growth catalyst. With the growth of AI infrastructure and cloud services, enterprises are facing increasingly sophisticated cyberattacks. Enterprises are deploying advanced WAF solutions to boost their defense mechanism. One of the major advantages of AKAM is that its WAF runs across 4,300 locations in 700 cities. This allows it to stop attacks at the network edge and mitigate interference on the customer’s infrastructure.
Akamai Guardicore, which provides microsegmentation that limits the movements of attackers after any security breach, is also witnessing strong adoption. Businesses are using APIs more than ever to support cloud applications and AI workloads. Securing those API has become critical for business operations. Backed by this emerging trend, Akamai has secured several API customer wins. During the first quarter, Africa’s one of the largest telecom groups, a major investment manager in South America, a leading investment bank from the Middle East and one of the largest fintech companies in the United States have opted to deploy Akamai API security solutions.
Akamai’s security segment is expected to remain its major growth engine in the upcoming quarters as well. Per our estimate, Akamai is projected to generate $2.43 billion in revenues in 2026, indicating growth of 8.5% year over year.
How Are Competitors Faring?
In the cybersecurity space, Akamai faces competition from Cloudflare NET and Fastly FSLY. Cloudflare boasts an industry-leading web application firewall that efficiently blocks zero-day attacks and uses machine learning to improve threat detection. Cloudflare continues to expand in this space on the back of its global cloud security platform. The company entered Zero Trust integrations with companies like Atlassian, Microsoft and Sumo Logic, enabling businesses to secure tools and applications with enterprise-ready Zero Trust security.
Fastly ended the first quarter with 634 large customers, defined as those producing more than $100,000 in annualized revenues in the quarter. It continues to broaden its security and developer toolset, supporting cross-sell and higher committed revenue over time. Fastly is aligning product updates with growing AI agent activity and enterprise needs for control, security, and performance at the edge. AI-related demand is expected to be a major tailwind in the upcoming quarters.
AKAM’s Price Performance, Valuation and Estimates
Akamai shares have rallied 63.6% over the past year compared with the industry’s growth of 80.4%.
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Going by the price/earnings ratio, the company's shares currently trade at 18.11 forward earnings, lower than 23.71 for the industry.
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Earnings estimates for 2026 have remained unchanged, and for 2027, they have decreased over the past 60 days.
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Akamai stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).