RISING TIDES
Observations from the IMC Research Process

CDNs are Capitalizing on AI-Driven Internet Traffic

A tidal wave of AI-driven traffic is creating a new, highly profitable demand cycle for the internet’s foundational infrastructure.

• The Internet’s Essential Backbone: Content Delivery Networks (CDNs) provide the foundational layer of the internet, operating the critical infrastructure designed to deliver data faster and more reliably. This physical network includes the edge servers and network visibility systems that are essential for any high-performance application. As AI makes performance non-negotiable, the value of this underlying infrastructure becomes paramount.
• A New Earnings Inflection Point: Historically, CDN growth has been driven by video and social traffic. A new wave is emerging around AI agents, which generate significantly higher request volumes and operate continuously, increasing overall traffic and requiring low-latency, distributed delivery and compute. This shift toward higher-frequency, latency-sensitive workloads increases network complexity and demand, directly benefiting CDN operators.
• Operatoring Leverage + Structural Demand. CDN business models are built on high operating leverage: once the core network infrastructure is in place, each incremental bit of data delivered is highly profitable. Fastly (FSLY) provides the clearest exposure to traffic-driven upside, Akamai (AKAM) layers compute, security, and inference, DigitalOcean (DOCN) enables developer deployment and NetScout (NTCT) monetizes visibility across increasingly complex networks. The result is one of the few software areas showing clear fundamental acceleration, driven by a compounding AI-driven traffic cycle layered onto infrastructure ownership.