Cloudflare vs. Akamai Technologies: Which CDN Stock Has an Edge?

Cloudflare NET and Akamai Technologies AKAM are both established players in the content delivery network (CDN) market. Both Cloudflare and Akamai are expected to gain from the rapidly expanding CDN space, which is expected to witness a CAGR of 18.04% from 2025 to 2034, per a report by Precedence Research.With this strong industry growth forecast, and given Cloudflare and Akamai Technologies' superior position in the CDN market, the question remains: Which stock has more upside potential? Let’s break down their fundamentals, growth prospects, market challenges and valuation to determine which offers a more compelling investment case.The Case for Cloudflare StockCloudflare’s CDN provides a globally distributed, high-performance platform that speeds up content delivery, all the while keeping secure web connectivity. Cloudflare reduces latency and improves the load time of web pages by using a large network of edge locations to cache content close to users.Cloudflare uses methods like tiered caching, Argo smart routing, and cache reserve to minimize traffic and optimize delivery efficiency. The company goes further to secure its clients with security tools, including Distributed Denial of Services (DDoS), Web Application Firewall (WAF), bot management, and automatic Secure Sockets Layer and Transport Layer Security.Furthermore, NET’s CDN supports advanced protocols, including HTTP/3, and offers developer flexibility through Cloudflare Workers. Cloudflare Workers lets developers build, deploy, and scale applications across Cloudflare's global network with a single command. The Workers platform has been adopted by more than three million developers since its launch date.Since the CDN contributes to a large portion of NET’s revenues and is also gaining explosive growth, Cloudflare expects its 2025 revenues to be between $2.09 billion and $2.094 billion. The Zacks Consensus Estimate for NET’s 2025 revenues is pegged at 2.09 billion, indicating year-over-year growth of 25.4%.Cloudflare’s non-GAAP earnings per share are anticipated to be between 79 cents and 80 cents. The Zacks Consensus Estimate for the same is pegged at 79 cents per share, indicating year-over-year growth of 5.3%.Image Source: Zacks Investment ResearchThe Case for Akamai TechnologiesAkamai Technologies is one of the oldest players in the enterprise CDN space, with a wide reach across 135 countries supported by 365,000 servers across the globe. Like any other established CDN player, Akamai also offers an ecosystem combining cloud computing and security in its CDN.Akamai Technologies integrates security offerings like DDoS and WAF protection with edge computing solutions like EdgeWorkers and EdgeKV. In addition to these, Akamai offers advanced features like API Acceleration, Adaptive Media Delivery, Download Delivery, and Global Traffic Management. AKAM’s CDN platform handles approximately two trillion web interactions on a daily basis.Akamai Technologies has always priced its services higher than its competitors, prompting some of its key clients to develop their own DIY CDN initiatives. Hence, Akamai Technologies moved toward a more aggressive pricing strategy in the hope of attracting more customers and traffic to its network, especially in the video content segment, potentially hurting its profitability.Akamai Technologies' delivery segment revenues have been on a constant decline for the past 17 quarters, raising investors’ concerns about the sustainability of its CDN business. Akamai Technologies' profitability is also under pressure. The company expects its non-GAAP earnings to be in the range of $6.10-$6.40 per share. The Zacks Consensus Estimate for the same is pegged at $6.27 per share, indicating a year-over-year decline of 3.2%.Image Source: Zacks Investment ResearchStock Price Performance and Valuation of AKAM and NETIn the year-to-date period, Cloudflare shares have climbed 66.9% while Akamai Technologies has plunged 18.3%.Image Source: Zacks Investment ResearchCloudflare is trading at a forward sales multiple of 26.65X, while AKAM is trading at a forward sales multiple of 2.71X. Although Cloudflare seems to be overvalued, its strong position in the CDN space and robust financials justify its current valuation.Image Source: Zacks Investment ResearchConclusion: NET vs. AKAM StockBoth companies are major players in the CDN space, but Akamai Technologies is slowly losing its grip, given its declining delivery segment’s revenues, while Cloudflare continues to capture market share and flourish in this space.Currently, Cloudflare carries a Zacks Rank #3 (Hold), giving it an edge over Akamai Technologies, which has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report Cloudflare, Inc. (NET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks