This week was the best of times for Akamai and the worst of times for Cloudflare.
On the same evening, content delivery network mainstay Cloudflare announced it was cutting about a fifth of its staff in a realignment around AI, its competitor Akamai announced a seven-year, $1.8 billion deal with a leading LLM provider that Bloomberg identified as Anthropic.
Akamai CEO Tom Leighton said this was the largest deal in the company’s history and that it came after another large, unidentified frontier-model developer signed a $200 million deal last quarter.
“These leaders in AI have chosen Akamai because their AI workloads need the scale, performance and reliability that our cloud platform provides,” he said during the company’s first quarter earnings call on Thursday.
Akamai, which has 4,300 locations in 700 cities across 130 countries, won the deal against stiff competition from hyperscalers and neoclouds. He said Akamai’s ability to manage and scale complex distributed systems, as well as its low latency, tipped the scales in its favor.
Given the supply chain constraints in datacenter space, especially as it relates to memory costs and the infrastructure needed inside of large datacenter buildouts, one analyst asked if Akamai planned any increase to its capital expenditures this year to pay for it. Akamai executive vice president and CFO Ed McGowan said that was not likely.
“We’ve been able to get the supply chain ready. We anticipate receiving all the goods that we need to deliver this services over the next seven years within the next 12 months,” he said. “Now there’s always potential for slippage and delays, but we have mechanisms in our contracts to deal with, if, in say six months from now, prices were to go up. So we’ve taken that into consideration.”
McGowan said it is a consumption-based contract over seven years, so as soon as Akamai ramps the necessary capacity, it will start taking revenue, which he expects to begin happening later this year.
Winning this deal and ones like it has been Akamai’s goal in the AI era, Leighton said.
“This has been the strategy all along. So we’re very pleased to be executing against it,” he said. “The goal has been to be deploying a distributed inference platform, distributed compute platform that would be desired by enterprises across the spectrum … The platform is to a point where we can do that, and I think you’ll see more of this going forward.”
On the same day, across the country, Cloudflare was spelling out the bad news to its employees that it planned to cut the workforce by 1,100, roughly 20 percent. Cloudflare co-founders Matthew Prince and Michelle Zatlyn said it was not about cutting costs, but about building a company that meets the AI moment.
“We have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere,” they wrote in a blog post.
Cloudflare’s revenues grew 34 percent year over year to reach $639.8 million in the first quarter. It posted a net loss of $22.9 million. It expects to pay up to $150 million in severance and benefit payments related to the layoffs.
While Akamai’s stock price surged 26 percent on Friday, Cloudflare dropped 23 percent. With a market cap of over $69 billion, Cloudflare still has more than three times Akamai’s market cap. ®
