A 27-year-old internet plumbing company that most investors had written off as a sleepy CDN just landed in the AI infrastructure conversation, and Wall Street noticed. Akamai's stock jumped about 26% Friday after the company said an unnamed "leading frontier model provider" agreed to spend $1.8 billion on its cloud over the next seven years.
Q1 revenue topped $1 billion, up 6% from a year ago, but the mix is what tells the story.
Cloud infrastructure services revenue jumped 40% to $95 million, while security revenue rose 11% to $590 million, and the legacy delivery business that built the company fell 7% to $389 million.
The new business is small but growing fastest, and it's the part Wall Street is suddenly willing to pay for.
For the second quarter, Akamai expects revenue between $1.08 billion and $1.1 billion, with adjusted profit per share of $1.45 to $1.65.
Akamai's pitch is location, since the company runs servers in 4,300 spots across 700 cities and 130 countries.
Think of AI inference, the part where a model actually answers a question, like delivering pizza, where the closer the kitchen is to the customer, the faster the pie gets there.
That's what Akamai is selling AI companies, and the new contract is paying for it.
"I think we've been undervalued for a while, and investors have been looking for some real validation that our different approach is going to pay off, and now we're getting that validation," CEO Tom Leighton said on CNBC's "Squawk Box."
The big AI cloud names are Amazon, Microsoft, and Google, all of which are pouring tens of billions into massive central data centers.
Akamai is doing the opposite, since its network was built to push web content close to users, which turns out to be a useful design for AI apps that need to answer in milliseconds.
That positions Akamai next to model builders like OpenAI and Anthropic on inference work, even though the company isn't a household AI name.
It's a smaller share of the AI infrastructure pie, but it's a piece the giants don't currently own outright.
CTO Robert Blumofe told CNBC last week that cloud infrastructure services is the smallest of Akamai's three businesses but also the fastest growing, alongside its older content delivery and cybersecurity arms.
The company plans to keep expanding its inference cloud, which provides the computing power, storage, and tools needed to run AI applications close to where users actually are.
Akamai isn't trying to be the next Nvidia. It's trying to be the network that makes AI feel instant, and the $1.8 billion deal is the first big check that says someone in the AI race is buying that pitch.
Leighton said the company has a strong pipeline of major enterprise customers, including some with very large cloud needs, which suggests the seven-year contract may not be the last one of its kind.
The stock is up 65% over the past 12 months, and Friday's jump showed there's still room to run if more frontier model providers follow.