Moody's Ratings has kept Akamai Technologies Inc.'s issuer rating at Baa2 but revised the outlook to negative from stable, reflecting concerns about a substantial increase in debt tied to the company's accelerated capital spending to develop AI-related compute capacity.
The company disclosed an unrated convertible debt offering whose proceeds materially surpass the capital required for the capital expenditure program Akamai has recently outlined. At closing, Moody's expects the company's near-term gross debt-to-EBITDA ratio to exceed 5x; the ratio is estimated to be nearer to 4.5x when adjusting for effectively pre-funded debt maturities in 2027. On a cash EBITDA basis, leverage metrics are roughly one turn lower.
Moody's noted that the proceeds in excess of currently announced capex plans will likely be reserved for additional AI-related edge compute and inferencing expansion. However, the lack of clear detail about the specific uses and the economics of that future buildout complicates efforts to forecast when and how quickly Akamai might reduce leverage.
The agency retained the Baa2 rating in light of several factors that support Akamai's credit profile. The company remains the largest content delivery network (CDN) provider and retains competitive advantages serving customers with high-volume, low-latency needs, particularly across global media and gaming sectors. In addition to CDN operations, Akamai has established leading positions across web performance and rapidly growing security software markets, which Moody's indicates now surpass CDN revenue.
Akamai is expanding into cloud computing and related edge computing and inference services. Moody's anticipates that growth from combined compute and security offerings should more than offset declines in the company's traditional CDN business and drive total revenue growth in the high-single digit to low double-digit range. The ongoing buildout of the compute platform is expected to keep capital spending elevated relative to historical norms.
On the liquidity front, as of Dec. 31, 2025, Akamai reported cash, liquid short-term and long-term investments totaling $1.9 billion and held an undrawn $1 billion revolving credit facility that matures in 2028. Moody's projects that cash and related investments will rise to well over $4 billion assuming the convertible note issuance proceeds as proposed. Despite that increase in liquid resources, overall free cash flow is likely to be negative over the coming year and potentially longer, given the rapid ramp in capital expenditures.