The technology sector has been living for months on the promise of almost unlimited profits from generative artificial intelligence, but Akamai Technologies ‘ latest results are a sobering reminder of the physical limitations of this revolution. Although the Cambridge-based company exceeded revenue expectations in the fourth quarter, forecasts for the coming months triggered a nearly nine per cent drop in its share price. The reason? Rising infrastructure costs, which are beginning to bite at the foundations of profitability.
The problem is not a lack of demand for Akamai’s services, but a global scramble for components. The rapid expansion of data centres by technology giants has sucked most of the available memory chips from the market. Semiconductor manufacturers, chasing high-margin orders for the AI sector, have reduced supply for the remaining players, leading to drastic price spikes. CEO Tom Leighton admitted bluntly: memory costs have almost doubled in recent months.
For companies operating at the intersection of cloud and security, such as Akamai, this means having to make a difficult choice between maintaining margins and aggressively fighting for customers. Leighton has already signalled that the company is considering shifting some of this burden to contractors. Such a move, while economically justified, could put customer loyalty to the test at a time when companies are meticulously optimising their IT budgets.
Despite first-quarter projected earnings per share of – USD – well below Wall Street expectations – Akamai’s long-term picture remains stable. The company forecasts that revenues in 2026 could reach up to USD billion. Underpinning this growth is the unrelenting demand for cyber-security and edge computing, which are becoming key in the era of migration to the cloud.
