Jim Cramer highlights the biggest players in internet infrastructure

>> LATELY, WE'VE SEEN A QUIET RALLY IN THE INTERNET. INFRASTRUCTURE STOCKS THAT ARE KNOWN AS CONTENT DELIVERY NETWORKS. CLOUDFLARE, AKAMAI TECHNOLOGIES AND FASTLY. CLOUDFLARE STOCK'S UP 121% FROM ITS FEBRUARY LOW. AKAMAI IS UP 51% FROM ITS LOWS LAST NOVEMBER AND FAST. HE'S BEEN KIND OF A ROLLER COASTER, BUT ONE THAT'S FINISHED VERY STRONG NOW UP 159% FOR THE YEAR. THESE GUYS OPERATE IN A PRETTY STRAIGHTFORWARD INDUSTRY. THE BUILD THE BUILD HUBS OF SERVERS ALL OVER THE WORLD AND THEN HELP MANAGE DIGITAL TRAFFIC SO THAT EVERYTHING OPERATES FASTER AND MORE RELIABLY. BUT THIS IS NOT A NEW BUSINESS. I USED TO RECOMMEND AKAMAI ALL THE TIME IN 2005 WHEN THE SHOW STARTED, AND IT WAS A GREAT PERFORMER UNTIL THE FINANCIAL CRISIS HIT. LATELY, THEY'VE BECOME MORE ABOUT CYBERSECURITY AND COLLECTING DATA, WHICH IS ONE REASON I KEEP RECOMMENDING CLOUDFLARE. IN GENERAL. THE THESIS FOR THE CONTENT DELIVERY NETWORKS IS THAT THESE COMPANIES THRIVE WHEN THE INTERNET TRAFFIC IS ON THE RISE, AND THE RISE OF AI AGENTS HAS BOOSTED THAT TRAFFIC DRAMATICALLY. I THINK THAT'S THE KEY REASON FOR THESE STOCKS. THAT'S WHY THEY'RE ON FIRE. BUT EACH OF THE STORIES IS VERY DIFFERENT. LET'S START WITH CLOUDFLARE. NET, WHICH IS BY FAR THE LARGEST OF THE CONTENT DELIVERY NETWORKS WITH A STOCK THAT'S NOW UP OVER 2,200% SINCE IT CAME PUBLIC IN 2019. WE'VE HAD CEO MATTHEW PRINCE ON THE SHOW MANY, MANY TIMES, AND HE'S BEEN VERY PRESCIENT ABOUT WHAT THE ARRIVAL OF AI MEANS FOR THE REST OF THE INTERNET. THE LAST TIME WE SPOKE TO HIM IS IN JUNE. HE SAID THAT TRAFFIC FROM AI AGENTS HAD ALREADY SURPASSED TRAFFIC FROM HUMANS. WHAT A GREAT CALL THAT WAS. THAT'S THE POINT OF AGENTS. IF YOU'RE COMPARISON SHOPPING FOR SOMETHING, YOU MIGHT ONLY CHECK A FEW WEBSITES, BUT AN AI AGENT WILL VISIT THOUSANDS OF SITES IN ORDER TO FIND YOU THE BEST DEAL. SO THERE'S A HECK OF A LOT MORE WEB TRAFFIC NOW, AND SOMEBODY LIKE CLOUDFLARE NEEDS TO HELP US HANDLE IT. THAT'S ONE REASON WHY THE STOCK KEEPS PUTTING UP THESE FANTASTIC NUMBERS. WITH STEADILY ACCELERATING REVENUE GROWTH, OR ARG, OVER THE PAST YEAR OR SO. NEXT, THERE'S AKAMAI. NOW, LATE LAST YEAR, THEY ANNOUNCED A NEW INITIATIVE, AKAMAI INFERENCE CLOUD, WHICH IS BASICALLY A NETWORK OF MANY SMALLER DATA CENTERS SPREAD ACROSS THE GLOBE THAT HELP THESE AI MODELS PROCESS DATA. IMAGINE FIGURES THAT WE'RE MOVING FROM A PERIOD OF TRAINING AI MODELS TO A WORLD WHERE WE ACTUALLY USE THESE MODELS AT SCALE, AND THAT REQUIRES A LOT MORE INFRASTRUCTURE. NOW, IN EARLY AUGUST, WE HAD AKAMAI CEO DOCTOR TOM LEIGHTON ON THE SHOW FOR THE FIRST TIME IN OVER FIVE YEARS. I'M GOING TO LET HIM EXPLAIN WHAT HIS COMPANY IS TRYING TO DO. >> WE'RE UNIQUE IN BEING. >> ABLE TO SUPPORT THE AI INFRASTRUCTURE NEEDS FROM CORE TO EDGE, SO THAT WHATEVER TASK YOU HAVE, WHATEVER AGENT YOU'RE WORKING WITH OR MODEL, IF YOU NEED TO TRAIN IT, OKAY, MAYBE WE DO THAT IN THE CORE. BUT THE REAL USAGE, THE DAY TO DAY USES IS INFERENCE. WHERE THAT MODEL IS BEING QUERIED. IT'S TELLING A ROBOT TO DO SOMETHING AND THAT YOU WANT TO DO CLOSE TO THE ROBOT OR CLOSE TO THE USER. SO IT'S FAST AND SCALES AND IS EFFICIENT. >> EVER SINCE THAT INTERVIEW, I'VE BEEN THINKING A LOT ABOUT THIS AKAMAI PLAN. FIRST, IT MAKES TOTAL SENSE THAT YOU NEED DISTRIBUTED DATA CENTERS, ESPECIALLY AS WE GET INTO THINGS LIKE THIS PHYSICAL AI, BECAUSE THIS REQUIRES A LOT OF BANDWIDTH, AND YOU WANT THE INFRASTRUCTURE AS CLOSE TO THE USER AS POSSIBLE. THAT REDUCES LATENCY SPEED. PLUS, LATELY WE'VE SEEN MASSIVE CENTRAL AI DATA CENTERS BECOME POLITICALLY TOXIC. AND IT STRIKES ME THAT AKAMAI'S IDEA OF BUILDING SMALLER DATA CENTERS THAT COULD BE AN EASIER SALE, DON'T YOU THINK? NOW, THIS IS AN INVESTMENT YEAR FOR AKAMAI. THEY HAVE TO SPEND A LOT OF A BIT. THEY GOT TO ACQUIRE AND BUILD THE INFRASTRUCTURE FOR THEIR INFERENCE CLOUD, WHICH WILL TRANSLATE INTO A MEANINGFUL EARNINGS HIT. BUT MADRID SAYS THERE'S A TON OF CUSTOMER INTEREST HERE. AND THEY EXPECT BUSINESS TO TURN UP IN THE FOURTH QUARTER FOR REALLY BOOMING IN 2027. HEY, BY THE WAY, LAST THURSDAY, AKAMAI ANNOUNCED THIS BIG WIN WITH ANTHROPIC FOR $11.6 BILLION CONTRACTUAL COMMITMENT OVER SEVEN YEARS. CLEARLY, ANTHROPIC NEEDS THIS ADDITIONAL CAPACITY AND THEY'RE WILLING TO PAY FOR IT. THIS WORKS OUT, BY THE WAY, TO $1.66 BILLION PER YEAR. PRETTY IMPRESSIVE, GIVEN THAT IT'S MORE THAN A THIRD OF WHAT AKAMAI IS EXPECTED TO BRING IN THIS YEAR. INITIALLY, THE STOCK SPIKED IN RESPONSE, AS IT SHOULD, BUT NOW IT'S GIVEN BACK ALL OF THOSE GAINS AND THEN SOME. WELL, THAT FEELS LIKE A BUYING OPPORTUNITY TO ME. FINALLY, LET'S TALK A LITTLE BIT ABOUT FASTLY. THIS IS NOT A COMPANY THAT I'VE SPENT MUCH TIME ON RECENTLY. I REMEMBER FASTLY AS A FLEETING, PANDEMIC ERA. DARLING. THE STOCK CAUGHT FIRE AT ONE POINT, IN LARGE PART BECAUSE IT WAS THE CONTENT DELIVERY NETWORK FOR TIKTOK, WHICH WAS EXPLODING IN POPULARITY AT THE TIME. BUT THEN FASTLY LOST MOST OF THE TIKTOK BUSINESS, AND THE STOCK IMPLODED FOR YEARS. IT FELT LIKE A BROKEN MOMENTUM STOCK THAT WAS LOSING MONEY. THEY DIDN'T START TURNING A PROFIT UNTIL LAST YEAR. LATELY, THOUGH, STOCKS HAD AN INCREDIBLE RUN, UP 159% FOR THE YEAR THANKS TO SOME SPECTACULAR EARNINGS NUMBERS. IF THAT WASN'T ENOUGH TO CATCH WALL STREET'S ATTENTION, FASTLY PUT ITSELF ON THE RADAR AGAIN LAST WEEK. FIRST. LAST TUESDAY, THE COMPANY HELD AN INVESTOR DAY WHERE MANAGEMENT EXPLAINED HOW FASTLY TRANSITIONING FROM A SIMPLE CONTENT DELIVERY NETWORK CDN TURNAROUND STORY TO A MUCH MORE EXCITING EDGE CLOUD PLAY FUELED BY BOOMING WEB TRAFFIC FROM ALL THESE AI AGENTS. SECOND, THIS CAME RIGHT AS EVERYBODY WAS REALIZING THAT THE POWER OF META'S MUSE PLATFORM, SOMETHING THAT REALLY LIT A FIRE UNDER THE STOCK. IN THE END, THE RISE OF AGENTIC AI HAS MADE ALL THREE OF THESE CONTENT DELIVERY NETWORKS INTO BIG WINNERS. SO HAVE YOU MISSED IT, OR CAN THE STOCKS KEEP RUNNING? TRICKY QUESTION. I LOVE CLOUDFLARE, BUT IT'S SELLING FOR 179 TIMES THIS YEAR'S EARNINGS. THEN AGAIN, THE STOCK'S ALWAYS BEEN EXPENSIVE. AND IF YOU LET THAT SCARE YOU AWAY YOU'VE MISSED SOME HUGE GAINS. STILL IF YOU WANT TO BUY CLOUDFLARE HERE, I RECOMMEND WAITING FOR A MEANINGFUL MARKET WIDE PULLBACK BETWEEN IRAN AND THE FEDERAL RESERVE. I BET SOMEONE'S GOING TO GIVE YOU AN OPPORTUNITY FAST. IT'S GOT A MORE REASONABLE VALUATION TRADING AT OVER 50 TIMES THIS YEAR'S EARNINGS. BUT THAT'S STILL PRETTY RICH. AND THE STOCK HAS A TENDENCY TO BE INSANELY VOLATILE. I'LL BE HONEST, THIS IS THE ONE I HAVE THE LEAST CONFIDENCE IN. SO AGAIN, I URGE YOU TO WAIT FOR A LOWER ENTRY POINT. BUT AKAMAI, I THINK YOU CAN BUY THAT STOCK RIGHT HERE, RIGHT NOW BECAUSE IT'S CHEAP. SELLING FOR LESS THAN 16 TIMES THIS YEAR'S EARNINGS ESTIMATES. AND YOU'RE BASICALLY GETTING THE LATEST ANTHROPIC PARTNERSHIP, WHICH I THOUGHT WAS GIGANTIC FOR FREE. SURE, THEY'RE HAVING A DOWN YEAR BECAUSE OF ALL THAT SPENDING THAT I MENTIONED, BUT THAT'S ABOUT TO TAKE A TURN FOR THE BETTER REAL SOON. HERE'S THE BOTTOM LINE. ONE SIDE EFFECT OF THE AI REVOLUTION IS THAT IT'S ALREADY CREATING AN INSANE AMOUNT OF WEB TRAFFIC, AND SOMEBODY NEEDS TO HELP US KEEP THE INTERNET RUNNING SMOOTHLY. THAT'S WHERE CLOUDFLARE, FASTLY, AND AKAMAI COME IN. ALTHOUGH FOR THE MOMENT, AKAMAI IS THE ONLY ONE THAT'S CHEAP ENOUGH FOR ME TO POUND THE TABLE ON. I WANT TO TAKE SOME CALLS, AND I WANT TO START WITH LINDA IN PENNSYLVANIA. LINDA. >> HELLO, JIM. >> GOD BLESS YOU. AND LISA. I FEEL LIKE YOU'RE PART OF MY FAMILY. AND WHEN YOU'RE ON VACATION, ALL THE EXTRA STUDIES YOU GIVE ME, I LOVE IT AND I HOPE WHEN THE BALL IS GOOD. JIM, THE REASON WHY I'M CALLING IS ABOUT AN IPO. I'VE BEEN TRADING SINCE ITS INCEPTION AND I'VE MADE MONEY, BUT SINCE APRIL IT'S DOWN 26%. I KNOW THERE'S DEBT AND YOU HAD CC ON YESTERDAY MICHAEL AND TRADER. SO I'M WONDERING SHOULD I TURN IT INTO SOME CASH AND MAYBE HOLD FOR SOMETHING BETTER OR HANG IN? >> WELL, HEY LINDA, FIRST OF ALL, THANK YOU FOR THOSE KIND WORDS. AND THANK YOU FOR WHAT YOU SAID ABOUT LISA. YOU KNOW, SHE IS THE ONE WHO KEEPS ME FROM YOU KNOW, SHE SAYS YOU GOT TO TAKE SOME TIME OFF, JIM. YOU REALLY HAVE TO. SO THAT'S A GREAT INSIGHT. I HAPPEN TO LIKE MICHAEL VERY MUCH. THE STOCK IS STILL ALMOST A DOUBLE. IT IS A DOUBLE FROM WHERE IT CAME PUBLIC. I HAVE TREMENDOUS FAITH IN HIM. THE STOCK DOES LOSE A LOT OF MONEY. SO THEN THE QUESTION IS DO YOU HAVE THE STOMACH FOR IT? IF I WERE YOU, I WOULD SAY, YOU KNOW WHAT? I WANT A SMALL POSITION, NOT A BIG ONE, BECAUSE IT DOES HAVE A BALANCE SHEET THAT I DON'T LIKE, BUT THAT'S PART OF THE BUSINESS. I SURE DO LIKE TRADER THOUGH. HE'S A STRAIGHT SHOOTING GUY. ROBIN. FLORIDA. ROB. >> BOOYAH. JIM. >> YEAH. ROB. >> JIM WHAT IS YOUR OPINION OF XON. THANK YOU. >> OKAY. I HAPPEN TO LIKE RICK SMITH. ANYONE WHO'S WATCHED THE SHOW FOR A COUPLE OF DECADES KNOWS THAT. I THINK RICK SMITH'S GREAT. I DO THINK THAT THERE'S ACTUAL ACTUAL COMPETITION OUT AXON AND THEY'VE GOT A GOOD PRODUCT. BUT I HAVE TO TELL YOU, WHEN THERE'S COMPETITION, THAT MEANS THERE'S GOING TO BE GROSS MARGIN PRESSURE. AND THIS GROSS MARGIN PRESSURE CAN'T HAVE A STOCK SELL FOR 54 TIMES EARNINGS. SO THE ANSWER IS I'M TAKING A BREATHER NOW ON AXON. I FEEL TERRIFIC ABOUT ABOUT COREY. BUT I WAS A LITTLE TOO NEGATIVE. I THINK THE CORE WE'VE HAS GOT IT'S THE ONE THAT JENSEN WONG THINKS IS THE BEST BUILDER. I'M NOT GOING TO GET A CHANCE OR AT LEAST IN. TRADER SAYS. JENSEN SAYS HE'S THE BEST. BUT WITH AI CREATING ALL THIS WEB TRAFFIC, I THINK HE'S. CONTENT DELIVERY PLAYERS ARE WORTH TAKING A LOOK AT. I LIKE THAT AKAMAI MUCH MORE MAD MONEY AHEAD AFTER YEAR SINCE ITS IPO HAS FIRMLY. THAT'S FERMI BETTER THAN PHILLY. PROVE THAT IT DESERVES TO BE A PUBLIC COMPANY. I'M TAKING A LOOK AT THE STOCK THAT MICRON REPORTED EARNINGS LAST NIGHT AND TODAY THE STOCK. WELL IT DIDN'T DO MUCH INITIALLY. I'M EXPLAINING WHY I STOOD BEHIND THE NAME DURING THE PERIOD WHEN IT WAS REAL UGLY TODAY. AND ALL YOUR CALLS RAPID FIRE IN