Anthropic's $11.6 billion purchase of CPU computing power detonates veteran technology stock Akamai

Abstract:

Early on Friday morning, Beijing time, Akamai Technologies, a veteran Internet infrastructure company, announced a significant expansion of its cooperation with Anthropic and obtained a seven-year contract commitment from the AI ​​company totaling US$11.6 billion. After the news was announced, Akmei’s U.S. stock price rose more than 16% after hours.

(Daily Chart of Acme, Source: TradingView)

According to the announcement,

Akmax will support Anthropic’s rapidly growing CPU workload needs through its cloud business’s distributed AI infrastructure and software

. There is still room for further expansion of cooperation between the two parties. Acme disclosed that

This transaction allows for an additional expansion of cooperation of up to $9 billion in the future, with a potential total commitment size of approximately $20 billion

.

(Source: company official website)

For reference, the company announced earlier this year that

multi-year "cloud infrastructure services" contract commitments from multiple customers total more than $2.8 billion

. Acme's second quarter report released in August this year showed that the company's cloud infrastructure service revenue was US$99.319 million, a year-on-year increase of 39%.

With the business cooperation,

the two parties have also established interests at the equity level

. Akmi issued warrants to Anthropic, allowing it to purchase non-voting Series B convertible preferred shares, which correspond to 7.7 million ordinary shares after conversion, equivalent to approximately 5% of Akmi's issued ordinary shares. The exercise price corresponding to each ordinary share is US$111.33.

Undertaking this large order also requires large-scale investment. Acme expects total capital expenditures related to the US$11.6 billion contract commitment to be approximately US$5.5 billion, with approximately US$1.7 billion in additional capital expenditures in 2026 to secure and procure critical supply chain components, including memory, in advance. The company also stated that

This agreement will not change the revenue guidance for 2026

.

In fact, there have been traces of cooperation between the two parties before.

In May this year, Acme disclosed in its first quarter report that a U.S. cutting-edge model developer committed to purchasing US$1.8 billion in cloud infrastructure services within seven years, but the customer name was not announced at the time

. Subsequent media reports pointed the customer to Anthropic.

For investors unfamiliar with the company, Acme's story dates back to the early days of the Internet.

According to the company's official website, in 1995, Tim Berners-Lee, the inventor of the World Wide Web, raised a challenge at MIT: As Internet usage increases, how to transmit network content in a better way to avoid increasingly serious congestion? Tom Layton, a professor of applied mathematics, and Danny Lewin, who later joined the research team, found solutions through algorithm research and founded Akme in 1998.

The word "Akamai" comes from the Hawaiian language, which means smart and witty.

The company's starting business is content distribution network, also known as CDN.

In layman's terms, it disperses copies of web pages, pictures, videos and other content on servers in various places, allowing users to obtain content from closer nodes, thus shortening loading times and easing pressure on website servers.

Therefore, the majority of investors may have never heard of the name "Akmai", but they may use its services when browsing websites, watching videos or downloading software. The company launched commercial services in 1999, and Yahoo, the traffic giant at that time, was one of its early charter customers.

With business development, Akmet gradually expanded its services to network security and cloud computing.

In March 2022, the company completed the acquisition of cloud service provider Linode

, with a transaction value of approximately US$900 million, will combine the latter’s cloud computing capabilities with its own edge platform and security services to further expand its cloud computing business.