AKAM's $11.6B Anthropic deal is a pivotal turning point supporting long-term upside and revenue re-acceleration; immediate market response was weaker than pre-market.

We're back with " Morning Trade Live" to focus on the annual chart for "Akamai Technologies". The stock reached record highs last May that it had n't seen in more than 25 years, but has since fallen by more than 30% .

We are currently trading up 7.5 percent . Looking at the year's progress, we are still up by more than 50% since the beginning of the year. We are up by approximately 40%. So, it's not a bad performance despite our retreat from the peaks,

but today we are looking at Akamai's new deal with Anthropic. We now have this deal between "Akamay" and " Anthropic". It's a seven-year deal. It is valued at $11.6 billion for providing computing services to Anthropic.

This multi-year commitment will support Anthropic Services in accelerating the demands of data processing unit workloads by leveraging Akamai's distributed cloud AI infrastructure and software .

Clearly, the market views this deal as a win for the cloud infrastructure company.

Stocks rose by about 20% in pre- market trading. It is now up by more than 7.5 percent in early trading. They also stated that the deal would include $5.5 billion in new capital expenditures, including the purchase of memory units, with $1.6 billion earmarked for 2026.

The deal also includes an option to expand by an additional $9 billion if further computing capabilities are needed.

As part of the deal, Akamai issued a share purchase right to Anthropic giving it the right to exercise the purchase of 7.7 million shares of Akamai common stock, or 5% of outstanding shares, at a price of $111.33 per share.

Part of those shares are due today, while the remainder depends on the deal being expanded by an additional $9 billion.

For reference, we are currently trading at $118.71 with this upward trend. Even without the additional $9 billion option, this is a huge deal for Akamai .

Analysts have already begun commenting, with Guggenheim noting that annual recurring revenue from this deal alone is more than five times the company’s cloud infrastructure services revenue in 2025, and 40% of its total revenue of $4.2 billion.

They maintain a " buy" rating. Today they are raising their target price for the stock to $225 from $190.

Evercore also issued a new memo describing the deal as "historic" for Akamai, noting that it reinforces their view that the company is poised to re- accelerate revenue growth over multiple years.

The company also highlighted the importance of the deal being free of exclusivity clauses, stating : "The Anthropic partnership does not prevent Akamai from working with other leading laboratories , which could support further gains in artificial intelligence over time."

Evercore rates the stock as "outperforming" and sets a price target of 175.

Bank of America also issued an optimistic note. They described this news as a pivotal turning point for Akamai. They also raised their target price from 175 to 185 while maintaining a "buy" rating on the stock .

Sam, I mean the response to this from the markets and the analyst community has been very strong and in support of what this could mean for Akamai's future. Yes, and you can clearly see that reflected in the stock's performance today with this 8% gain.

How would you handle a typical trading deal in this stock? Well, I'll tell you that it's interesting, as Molly pointed out, since analysts certainly seem to agree that the stock has long-term upside potential .

I think if you look at the price movement based on what we saw during the night before the opening, you will find that it is less than half of what it was earlier. So, the response after the opening wasn't great, but the stock is still holding fairly strong gains here.

I truly believe there is a long-term opportunity to capture upward gains, but if we see further weakness and the stock does not respond as expected, there is an opportunity to buy it near the bottom levels.

Therefore, today's trading example pertains to the month of October. It lasts for three weeks. The process involves buying call spreads. It is a buy-out of the spread for call options between 125 and 140 for October, with a sell-out put option at 110 to finance the cost of that transaction.

So, you can basically do that at a balanced cost here. This allows us to catch an upward move in the next three weeks if we see a positive response that brings the price back to where it was just 24 hours ago.

If that doesn't happen, the opportunity lies in snapping up the stock at bottom levels, and I think it still looks like a good option to hold in the long term. But I don't know if this news will necessarily be the short-term catalyst for the stock to break out of this price range. Well, at least it's a good response so far.