Equinix Shares Tumble as AI-Driven Expansion Plans Raise Investor Concerns

Equinix shares fall as revenue, capital spending forecast disappoint investors

June 26 (Reuters) - Equinix's shares (EQIX.O), opens new tab fell 8% on Thursday after the data center firm forecast revenue growth below expectations and projected heavy investments to cater to AI demand in the long term. The company plans to double its current capacity over the next five years to capitalize on the growing demand for infrastructure to meet the surge in artificial intelligence use. Shares of peers Iron Mountain (IRM.N), opens new tab, Digital Realty (DLR.N), opens new tab and Core Scientific (CORZ.O), opens new tab fell between 2% and 3%. Equinix is ramping up investments to expand its infrastructure for rising AI inference demand. While this is expected to drive stronger growth in the long run -- potentially crossing 10% by 2030 -- near-term growth will remain modest, BMO Capital Markets analysts said in a note. It expects its annual revenue to grow 7% to 10% from 2025 to 2029, slightly lower than its prior forecast. Meanwhile, it updated its forecast for adjusted funds from operations (AFFO) per share growth to 5% to 9% now from 7% to 10%, which disappointed investors. To position for growing AI inference demand, Equinix plans to increase annual capital spending to $4 billion to $5 billion from 2026 to 2029, up from $3.3 billion in 2025. Reporting by Akash Sriram in Bengaluru; Editing by Leroy Leo Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Business

Why Equinix Stock Was Swooning This Week | The Motley Fool

The data center industry is standing in front of major expansion due to the unbending popularity of artificial intelligence (AI). Despite that, top sector name Equinix (EQIX -9.23%) has been having a rough few days on the stock exchange of late, especially following its analyst day event on Wednesday. All told, according to data compiled by S&P Global Market Intelligence, week-to-date as of Thursday night, the company's share price was down by almost 16%. No investor likes to hear that one of their investments might experience a slump in its growth rates. Yet that's exactly what happened with Equinix; on analyst day, it proffered guidance for its adjusted funds from operations (AFFO), the key profitability line item for real estate investment trusts (REITs) like itself. Management is forecasting 5% to 9% annual growth from 2025 through 2029. The No. 1 reason for this is that the heavy demand for artificial intelligence (AI) capabilities requires significant expansion in data center capacity. So, a company like Equinix that specializes in such facilities is essentially forced to spend now to reap the benefits later. Regardless, analysts didn't hesitate to become more bearish on the company. In fact, several institutions (such as Raymond James and BMO Capital Markets) downgraded their recommendations on the stock. Personally, I don't think that's fair. Intensifying capital expenditure requirements are entirely justified, given that so many developers and end users want robust AI functionality as soon as humanly possible, without bottlenecks. It's data center operators like Equinix that have to pay up front for this, at least at the current stage. This stock's double-digit dip is, therefore, a good opportunity to buy a good company cheaply, in my view. Yes, profitability will be dinged for a while, but I think Equinix has great potential for patient investors who are willing to wait it out over the long term.

Equinix shares fall as revenue, capital spending forecast disappoint investors

(Reuters) -Equinix's shares fell 8% on Thursday after the data center firm forecast revenue growth below expectations and projected heavy investments to cater to AI demand in the long term. The company plans to double its current capacity over the next five years to capitalize on the growing demand for infrastructure to meet the surge in artificial intelligence use. Shares of peers Iron Mountain, Digital Realty and Core Scientific fell between 2% and 3%. Equinix is ramping up investments to expand its infrastructure for rising AI inference demand. While this is expected to drive stronger growth in the long run -- potentially crossing 10% by 2030 -- near-term growth will remain modest, BMO Capital Markets analysts said in a note. It expects its annual revenue to grow 7% to 10% from 2025 to 2029, slightly lower than its prior forecast. Meanwhile, it updated its forecast for adjusted funds from operations (AFFO) per share growth to 5% to 9% now from 7% to 10%, which disappointed investors. To position for growing AI inference demand, Equinix plans to increase annual capital spending to $4 billion to $5 billion from 2026 to 2029, up from $3.3 billion in 2025. (Reporting by Akash Sriram in Bengaluru; Editing by Leroy Leo)