Equinix shares drop 8% after weaker growth forecast

Equinix’s stock dropped 8% after it forecast slower revenue growth and announced major AI infrastructure investments.

The data center company plans to double its data center capacity over the next five years, increasing annual capital spending to US$4 billion to US$5 billion starting from 2026 to 2029.

This is up from a projected US$3.3 billion for 2025.

Equinix adjusted its forecast for annual revenue growth to 7% to 10% between 2025 and 2029, slightly below earlier estimates.

The company also revised its expected growth in adjusted funds from operations (AFFO) per share to 5% to 9%.

These updates disappointed investors, impacting the company’s stock negatively.

Analysts at BMO Capital Markets said Equinix’s long-term investments may boost post-2030 growth, but near-term performance will likely remain moderate.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The unprecedented capital race reshaping data center economics

Equinix’s stock drop reflects investor concerns about the enormous capital investments required to support AI infrastructure, a challenge facing the entire industry.

According to McKinsey, data centers will require a staggering $6.7 trillion in investment by 2030 to meet compute power demand, with $5.2 trillion dedicated to AI workloads alone 1.

Equinix’s plan to increase annual capital spending to $4-5 billion (up from $3.3 billion) mirrors industry-wide expansion pressures, as global data center capacity could triple by 2030 with 70% driven by AI workloads 1.

This massive capital requirement explains why Equinix reduced its adjusted funds from operations (AFFO) growth forecast to 5-9% (down from 7-10%), indicating the financial strain of unprecedented infrastructure expansion.

The market reaction to Equinix’s announcement and the sympathetic drops in competitors’ stocks demonstrate that investors are recalibrating expectations for the entire sector, recognizing that the AI infrastructure buildout will compress near-term profitability despite long-term growth potential.