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Price: $1007.66
Discount category: Close to intrinsic value
Next earnings: 2027-02-10
Next earnings is estimate: Yes
Company name: Equinix
Sector: Data center REIT
About: Equinix is a real estate investment trust that owns and runs data centers around the world. Customers rent space, power and cooling for their IT equipment in its International Business Exchange (IBX) data centers. They also connect directly to networks, clouds and other companies in the same buildings, and Equinix sells these links as interconnection services. At September 30, 2026, its footprint had 282 data centers in 77 markets and 36 countries. This includes 24 xScale data centers for very large cloud customers, which Equinix builds with joint venture partners. It had more than 500,000 interconnections at the end of 2025. Revenue was $2.571 billion in Q3 2026.
Thesis: The market prices Equinix for the risk that its larger build program earns lower returns than its existing data centers. Equinix plans total capital spending of $5 billion to $7 billion each year from 2027 to 2029, up from $3 billion to $4 billion in its earlier outlook. It funds part of this spending with debt: senior notes rose from $18.36 billion at the end of 2025 to $22.82 billion at September 30, 2026. Investors also question how much AI demand comes to Equinix and how much goes to large campuses that cloud providers build for themselves. For the gap to close, three things must be true. AFFO per share must grow 9% to 12% each year through 2029, as the July 2026 outlook says. New capacity must fill at returns near those of stabilized data centers, which earned 26% cash-on-cash returns in Q1 2026. Interconnection revenue must keep growing near the 10% of Q3 2026, because these services are the core of the platform. The Q4 2026 report and the 2027 guidance, expected in February 2027, give the next test. If these checks pass, the gap can close over two to three years. The main reason it may not close is a slowdown in AI or cloud demand while the large build program continues.
Risks: Equinix plans capital spending of $5 billion to $7 billion each year from 2027 to 2029. If demand slows, new data centers can fill slowly and earn lower returns. Total debt was $25.22 billion at September 30, 2026, and about $1.85 billion is due within one year. Higher interest rates raise the cost of refinancing and of new debt for the build program. Data centers need large amounts of power. Some governments limit new data centers because of their effect on power prices, land or water, and power shortages can delay projects. Large cloud providers build their own data centers. If AI workloads move to these campuses, demand for Equinix capacity can grow more slowly. Much of the revenue is in currencies other than the US dollar. A stronger dollar lowers reported revenue and AFFO.
Balance sheet: Cash: $3.6B Debt: $25.2B Net debt: $21.6B EBITDA, last 12 months: $5.1B Net debt / EBITDA: 4.2× (high) Interest cover: 4.0× Undrawn credit line: $5.5B, to July 2031 Debt due within 12 months: $1.9B Equinix funds itself mainly with senior unsecured notes. Total debt principal was $25.22 billion at September 30, 2026, up from $21.42 billion at December 31, 2025. It was made of senior notes of $22.82 billion, finance lease liabilities of $2.38 billion and mortgages and loans of $19 million, so debt here includes finance leases. About $1.85 billion of it is due within one year. Cash is cash, cash equivalents and short-term investments of $3.60 billion. EBITDA is adjusted EBITDA for the 12 months to September 30, 2026: Q4 2025 plus the first nine months of 2026. Interest cover is income from operations divided by interest expense for the first nine months of 2026. On July 27, 2026, Equinix signed a $5.5 billion unsecured revolving credit facility that runs to July 2031, and almost all of it was available at September 30, 2026. In 2026 it sold senior notes several times, including $3.0 billion in August, to fund its build program. It expects total capital spending of $5 billion to $6 billion in 2026 and cash dividends of about $2.04 billion. As of 2026-09-30.
Checkpoints: Oct 28, 2026: Q3 2026 results: bookings and guidance. Passed. Watch: Double-digit growth in recurring revenue and a raised 2026 guidance pass; lower bookings or a guidance cut fail. Outcome: Annualized gross bookings reached a record $533 million, up 35%, and Equinix raised its 2026 AFFO per share guidance to $43.71 to $44.11. Feb 10, 2027 (estimate): Q4 2026 results and 2027 guidance. Pending. Watch: 2027 guidance for AFFO per share growth of 9% or more passes; growth below the 9% to 12% range of the long-term outlook fails.
Recent events: 2026-10-28: Equinix reported Q3 2026 results. Revenue rose 11% to $2.571 billion, adjusted EBITDA rose 15% to $1.321 billion and AFFO per share was $11.64. Annualized gross bookings reached a record $533 million, up 35%. Equinix raised its 2026 guidance for the third time, to AFFO per share of $43.71 to $44.11. It plans to deliver nearly 40% more cabinets in 2026 than it first expected. It also announced Fabric One and Equinix Inference Exchange. 2026-09-02: Equinix completed its investment in a joint venture with CPP Investments that bought atNorth, a Nordic data center provider. Equinix paid $869 million for about 34% of the joint venture. 2026-08-06: Equinix sold $3.0 billion of senior notes: $850 million due 2029, $850 million due 2031, $650 million due 2033 and $650 million due 2036. 2026-07-29: Equinix reported Q2 2026 results and raised its outlook for 2027 to 2029. It now expects revenue growth of 10% to 13% a year, AFFO per share growth of 9% to 12% a year, an adjusted EBITDA margin of 53% or more in 2029 and capital spending of $5 billion to $7 billion a year. It added a record 9,700 net interconnections in the quarter. 2026-07-27: Equinix signed a $5.5 billion unsecured revolving credit facility that runs to July 2031. It replaced the $4.0 billion facility of 2022. 2026-04-29: Equinix reported Q1 2026 results and raised its 2026 outlook. Monthly recurring revenue grew 12%, and stabilized data centers earned cash-on-cash returns of 26%. 2026-03-10: Equinix named Olivier Leonetti, a former CFO of Eaton, as Chief Financial Officer from March 16, 2026. He followed Keith Taylor, who is retiring after 27 years at the company. 2026-02-27: Equinix and CPP Investments agreed to buy atNorth for an enterprise value of $4 billion. atNorth runs eight data centers in the Nordic countries and has 1 GW of secured power. 2026-02-11: Equinix reported 2025 results. Revenue was $9.217 billion, and interconnections passed 500,000. Equinix raised the quarterly dividend by 10% to $5.16 per share.