AKAM has shifted from legacy CDN to AI infrastructure, driven by a 39% Cloud revenue surge and NVDA Blackwell partnership for Inference Cloud.

With a 26% YTD rally and short interest 8.5% of float, bears are under water, causing greater short squeeze risk on the way up, but hasn’t squeezed yet.

Reporting today, Feb 19, after the close, the stock historically faces "sell the good news" reversals, making a move down the statistically likely outcome.

Akamai operates a distributed Edge Cloud, a massive global network designed to bring data and security closer to the end user. For years, it was considered the "plumbing of the internet"—the Cisco of the cloud.

However, AKAM underperformed for much of the last two years, missing the initial AI rally entirely.

That narrative is changing. The stock is up 26% YTD, following a familiar pattern of AI-Adjacent stocks suddenly catching a monster wave.

Two primary catalysts are driving this shift: a strategic partnership with NVIDIA to launch the Akamai Inference Cloud and Cloud Infrastructure revenue growth of 39% year-over-year.

Furthermore, Morgan Stanley’s "Sell to Buy" double-upgrade reflects a new consensus: 70% of Akamai’s revenue now stems from high-growth segments like security and compute.

As the stock languished before the breakthroughs in October and February, short grew interest in steady 1% increments. Their original business, Content Delivery, speeding up downloads has competition and shrinking revenue. They have a massive footprint of 365,000 servers. They have been seen as steadier, older, incumbent.

The steady accumulation of shorts has left the stock heavily crowded, with short interest % of float currently at the 8.5% level. This crowding has caused the short squeeze risk to rally significantly.

Interestingly, we did not see a full squeeze in October as short interest actually increased; however, with bears now underwater on a PnL basis, the tension is reaching a breaking point.

Akamai reports earnings today. Historically, the stock tends to reverse post-earnings. Given the aggressive YTD rally, the statistically likely outcome is a move down.

Want to know more? Access this data in real time using S3’s BLACK APP & BLACK MAP

The information herein (some of which has been obtained from third party sources without verification) is believed by S3 Partners, LLC (“S3 Partners”) to be reliable and accurate. Neither S3 Partners nor any of its affiliates makes any representation as to the accuracy or completeness of the information herein or accepts liability arising from its use. Prior to making any decisions based on the information herein, you should determine, without reliance upon S3 Partners, the economic risks, and merits, as well as the legal, tax, accounting, and investment consequences, of such decisions.