[ad_1]
This AI play has bottomed and is breaking out, according to options trader Zhang. How to play it
Akamai Technologies (AKAM) is uniquely positioned to benefit from the rising demand for artificial intelligence, leveraging its CDN edge server network to deliver low-latency, secure AI solutions. As industries increasingly rely on real-time AI models, Akamai’s infrastructure offers both speed and enhanced security by processing data closer to users. This technological edge, combined with the company’s attractive valuation, offers substantial upside potential, with recent market activity reflecting growing investor interest in its AI-driven growth opportunities. AKAM has formed a classic bottoming pattern over the past few months and is now breaking above a major resistance level at $102.50. This breakout is supported by its recent outperformance relative to the S & P 500 and positive momentum. AKAM trades at 15 times forward earnings, a significant discount compared to its industry average forward P-E of 27. While Akamai’s expected EPS growth of 7% lags behind the industry average of 14%, the company’s expected revenue growth of 16%, is nearly double the industry average of 9%, highlights Akamai’s ability to generate strong top-line growth. AI models distributed on Akamai’s extensive edge computing network provide significant upside potential, especially as demand for low-latency AI solutions increases across various industries. This positions Akamai as a key enabler of AI technologies, further supporting its bullish outlook. The trade With implied volatility on the higher end, options premiums are elevated. To reduce the cost of buying upside exposure, I’m suggesting that we buy a Dec $105/$120 call vertical @ $5.40 Debit. This entails: Buying Dec $105 Calls @ $6.90 Selling Dec $120 Calls @ $1.50 This call vertical spread offers a maximum potential reward of $960 per contract if AKAM is above $120 at expiration, with a maximum risk of $540 if AKAM is below $105 at expiration, yielding a potential reward-to-risk ratio of 1.8. DISCLOSURES: (Zhang has position in AKAM) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
[ad_2]
Source link
#play #bottomed #breaking #options #trader #Zhang #play