Equinix Earnings: Another Strong Quarter as the Firm Positions Its Portfolio for AI

Equinix remained consistent with another quarter of double-digit sales growth on the back of its continually expanding data center footprint. Company guidance for 2024 calls for a slight deceleration, but still high-single-digit sales growth. Artificial intelligence will undoubtedly lead to a long runway of very strong demand for Equinix, but we think it also brings new challenges, as it generally requires greater power density than Equinix’s data centers have typically offered. We anticipate recent levels of sales growth can be maintained, but we also think Equinix’s investment needs will remain high as the firm optimizes its data center portfolio. We’re raising our fair value estimate to $700 from $630, but believe the stock is overvalued.