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February was a tough month for the markets. The Dow and S&P 500 each slipped more than 1%, while the Nasdaq recorded its worst month since April 2024, pulling back 4%. Traders are asking the question on everyone’s mind: “When will we see a bottom?”

One of the best ways to find undervalued opportunities is simple: follow the money. Specifically, look at insider buying. After all, who knows a company better than the people running it?

Which is exactly why my attention is locked on Akamai Technologies (AKAM).

The Insider Signal

On February 27, 2025, Akamai’s CEO, Leighton F. Thompson, made a bold move—dropping $3 million of his own money to buy shares at $79.58.

Now, let me be clear: I don’t jump into a trade based on just one insider buy. But this isn’t the first time we’ve seen this play from Thompson.

The last time he made a purchase of this size was back in May, when AKAM was trading just above $90. What happened next? Over the following months, the stock rallied all the way to $105.

This kind of conviction from a seasoned CEO is a signal I can’t ignore.

What’s Happening with AKAM Now?

Let’s talk about why Akamai stock is trading at these levels.

The company got hammered after its last earnings report. Here’s the rundown:

• Guidance Miss: Akamai’s 2025 earnings guidance fell well short of Wall Street expectations, with forecasts of $6 to $6.40 per share versus the $6.82 analysts were expecting.
• Revenue Concerns: Sales forecasts of $4B to $4.2B also missed estimates, and the company’s operating margin guidance of 28% came in below consensus.
• Q4 Performance: Revenue rose 2.5% year-over-year to $1.02B, but weak spots like an 18% year-over-year decline in delivery revenue weighed heavily.

The Market Reaction: Shares dropped substantially after the report, and analysts were quick to lower their targets. BofA cut its price target from $125 to $100, citing limited near-term catalysts and concerns over TikTok’s geopolitical risks (Akamai’s largest customer).

The Contrarian Opportunity

Now, this doesn’t sound bullish, does it?

But here’s the thing: no one knows Akamai better than its CEO. Thompson’s $3 million purchase isn’t a ceremonial gesture—it’s a vote of confidence in the company’s long-term transformation.

Akamai is actively transitioning from slower-growth areas like legacy compute to high-growth markets like API security and cloud infrastructure services. These are the kinds of shifts that take time but can drive significant upside down the road.

And remember, the last time we saw this setup with Thompson buying big, the stock delivered strong gains.

Why AKAM? Why Now?

This isn’t about chasing headlines or jumping on an analyst’s downgrade. It’s about following the smart money.

Here’s what I like about this setup:

• Trading near lows after a sharp selloff.
• CEO puts $3 million on the line—his largest purchase since May.
• A history of insider buying leading to strong upside.
• Long-term transformation into high-growth markets like cybersecurity and cloud services.

We’ve played this kind of setup before with AKAM and walked away with excellent returns. I believe we can do it again.

Your Action Plan

I’ve put on a strategic options position to capitalize on this opportunity. Here’s why:

• High Insider Conviction: $3 million from the CEO at these levels is a strong signal, especially given his track record.
• A History of Rallies: The last time Thompson bought shares of this size, AKAM rallied hard.
• Earnings Recovery Potential: While the last report was mediocre, this is the type of stock that can post huge gains on a beat.

The strategy I’ve deployed allows me to:

• Control Risk: Limiting downside exposure while giving the stock time to recover.
• Leverage Time Decay: Using a carefully constructed spread, I’m positioned to take advantage of the natural time decay in options.
• Capture the Upside: If AKAM rallies over the next several quarters, this trade is set up to deliver a highly favorable reward-to-risk ratio.

Trading off insider activity is just one of the powerful strategies we utilize in The War Room.

If you’d like to learn more about our other catalyst-driven strategies and how they can help you target consistent market opportunities,click here to learn more.

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