Starting the lightning round of the September 9 episode of Mad Money, a caller asked for Jim Cramer’s opinion of Akamai Technologies, Inc. (NASDAQ:AKAM). He replied:
Akamai, the cybersecurity company, I think it’s terrific. And by the way, I thought that Cloudflare, NET, that was one of my favorites.
The two companies are benefiting from rising demand for cybersecurity and cloud infrastructure, but their financial profiles differ sharply, with Akamai investing heavily to expand its cloud business while Cloudflare, Inc. (NYSE:NET) is growing much faster at a far higher valuation.
Akamai’s Cloud Business is Accelerating
Akamai Technologies, Inc.’s second-quarter revenue rose 5% year over year to $1.1 billion, while security revenue increased 10% to $604 million and Cloud Infrastructure Services revenue jumped 39% to $99 million. The company said it had signed more than $2.8 billion of multiyear Cloud Infrastructure Services contracts in the first half of 2026, including a contract worth more than $600 million over four years with a U.S.-based technology company.
Akamai CEO Tom Leighton said the wins “validate Akamai’s growing position as a key AI infrastructure provider.” At the September 9 Goldman Sachs Communacopia + Technology Conference, CFO Ed McGowan said power and space were the biggest constraints on Akamai’s near-term growth. That constraint comes as the company increases spending. Second-quarter non-GAAP operating income fell 12% to $271 million, while capital expenditures rose to $346.5 million from $214.2 million a year earlier.
Cloudflare is Growing Faster
Cloudflare, Inc.’s second-quarter revenue increased 36% to $696.1 million, while current remaining performance obligations grew 35%. The company expects full-year 2026 revenue of $2.864 billion to $2.870 billion and non-GAAP operating income of $443 million to $445 million. The company remained unprofitable on a GAAP operating basis, reporting a second-quarter operating loss of $205.7 million. On a non-GAAP basis, however, it reported operating income of $96.1 million, or 14% of revenue.
Bear Case Centers on Execution and Valuation
Akamai Technologies, Inc.’s bear case is increasingly tied to the execution of its cloud expansion. Cloud Infrastructure Services grew 39% in the second quarter, but non-GAAP operating income declined 12%, while capital expenditures rose by more than $130 million year over year. McGowan’s September 9 comments also identified power and space as the biggest near-term growth constraint.
Cloudflare, Inc. faces a different risk: valuation. Its second-quarter growth remains strong, but the company still posted a $205.7 million GAAP operating loss. Trading at a P/E of 246x next year’s earnings, the shares require continued strong growth and progress toward GAAP profitability to support that valuation.
Hedge Fund Positioning Diverges
According to Insider Monkey, which tracks more than 1,000 hedge funds, 62 hedge funds held Akamai at the end of Q2, down from 74 in Q1. Cloudflare had 87 hedge fund holders, up from 84 in Q1. Short interest shows more caution toward Akamai as it stood at roughly 13.5% to 14% of the float, while Cloudflare’s short interest was roughly 2.1% to 2.3% of its float.
Cramer’s comments put two distinct investment profiles side by side: Akamai Technologies, Inc. is executing a capital-intensive cloud expansion with a growing AI infrastructure business, while Cloudflare, Inc. offers substantially faster growth but faces a higher valuation bar.
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