Moody’s and S&P downgrade Akamai on debt-fueled AI infrastructure buildout
Summary
Major credit rating agencies Moody's and S&P have downgraded Akamai. The decision follows the technology company's heavy borrowing to fund the expansion of its artificial intelligence infrastructure.
Our Take
Akamai is swimming against the tide today. While the Nasdaq rallies about 3%, AKAM opened down roughly 5% near $78.80 after Moody's and S&P downgraded the company and it announced $2.2 billion in convertible notes ($1.1 billion due 2028 and $1.1 billion due 2031). It has since clawed back to around $81, down about 2%.
The story is the cost of becoming an AI cloud. Akamai says its Cloud Infrastructure Services revenue should more than double to $1.1–$1.3 billion in 2027, backed by an $11.6 billion, seven-year commitment from Anthropic. But it spent $464 million in capex last quarter, guided Q4 below estimates, and is now borrowing to fund the buildout and refinance 2027 notes. Converts also bring dilution risk and hedge-related selling.
Key levels: support at $78.60 (today's low), then $77.37 (Thursday's low), with the 52-week low at $70.82 below. Resistance at $83.65 (today's high), then $85.45. The intraday bounce off $78.60 is constructive, but the trend stays down until the stock reclaims the mid-$80s.
Opinion of Tech & Money Press. Not financial advice.
Source: Read the full story at Stock Market News