Equinix (NASDAQ: EQIX) stock trades down about 21% year‑to‑date.
Despite this decline, analysts maintain a positive outlook, with average 12‑month price targets ranging from $957 to $1,200, a potential upside of 23% to 55%.
In June 2025, the company announced plans to increase capital expenditures to $4–$5 billion annually from 2026 to 2029, up from $3.3 billion in 2025.
This move aims to meet the escalating demand for AI‑driven computing power. However, the market reacted negatively, leading to a 9.6% drop in Equinix’s stock price on the announcement day.
Despite the short‑term volatility, the long‑term prospects remain robust. Equinix’s joint venture with Singapore’s GIC and Canada’s CPP Investments, valued at over $15 billion, is set to expand U.S. hyperscale data centers, adding more than 1.5 gigawatts of new capacity.
Nuclear Cost Curve Is Call Optionality
Power is now the gating factor for AI‑grade data centers. Equinix became the first colo operator to secure up to 500 MW of electricity from small‑modular reactors through a $25 million pre‑payment to Oklo in April 2024.
SMRs promise baseload power at around 90% capacity factors, a levelized cost the industry estimates at 30‑50 percent below the prevailing grid mix, and near‑zero carbon emissions. For perspective, 500 MW is enough to run the entire current Silicon Valley metro footprint.
SMRs fall outside the two‑to‑three‑year modeling horizon most analysts use and regulatory approvals are assumed to push commercialization into the 2030s. Yet Oklo targets its first 15‑MW units for 2028, with a path to scale capacity in 50‑MW blocks shortly thereafter.
Investors focused on Equinix’s elevated cap‑ex guidance see a headwind but they may be missing that Equinix is de‑risking future power inflation and securing an offtake that competitors will struggle to match.
Management has flagged “nuclear energy” only in passing on its 2025 Analyst Day slides, the slide sits in the middle of a dense supply‑chain deck and rarely makes broker summaries.
Even if just 200 MW of SMR power comes online by 2030 at a 3 ¢/kWh delta versus grid, the annual OPEX savings would exceed $50 million, or roughly $0.50 per share in AFFO, before any premium pricing for 24/7 low‑carbon power is considered. Few target prices include that upside.
The “Hidden SaaS” Inside the Colo Box
Equinix’s moat isn’t real estate, but interconnection. The company now hosts 486,000+ cross‑connects spanning more than 10,000 enterprises and networks, a scale analysts at peers simply cannot replicate.
Interconnection revenue grows faster than cabinet revenue, carries EBITDA margins in the mid‑70 percent range, and already makes up ~19 percent of recurring revenue, yet it occupies only a sliver of investor attention.
Most valuation models still apply REIT NAV metrics (cap rate per square foot) rather than a network‑effect framework (i.e., Metcalfe’s Law). That misses the exponential value of each incremental port.
Cross‑connect pricing is stickier than rents, because once two counterparties wire together, the connection stays in place for years and is rarely renegotiated.
Generative‑AI architectures are far more “chatty” across regions and clouds than classic SaaS, implying an uptick in horizontal data flows, in other words, more paid ports per AI cluster.
Assume cross‑connects compound at just 8 % annually, below the historical 10 %+. By 2029, the port base surpasses 740 k, adding $1 billion‑plus of high‑margin revenue that consensus still treats as mid‑single‑digit growth. A software‑style multiple on that stream alone could justify an extra $150–$200 per share of market cap.
High‑Density, Liquid‑Cooled “Micro‑Campuses”
Equinix’s newest IBX designs can support 100 kW‑plus per cabinet thanks to advanced liquid‑cooling technology co‑developed with server vendors. That is triple Digital Realty’s published design envelope and an order of magnitude above the industry average.
The Street still assumes average power densities of 8‑12 kW per cab through 2030. Yet Nvidia’s latest Blackwell inference nodes already draw 40 kW per rack, and liquid‑cooled LLM training clusters are pushing past 80 kW.
Equinix hasn’t broken out density‑based pricing, but management hints at a 1.5–2× uplift in MRR per square foot for liquid‑cooled deployments, without proportionate increases in opex or real‑estate footprint.
Because these cabinets sit inside existing metros, they capture AI inferencing workloads that require low‑latency proximity to end users—an “edge AI” niche hyperscalers struggle to serve from remote mega‑campuses.
Filling just 5 % of the global cabinet base with 80 kW racks at a $6,000/month premium would generate ~$1.1 billion of incremental annual revenue, again, largely absent from current sell‑side spreadsheets.
Growth Metrics May Be Misleading
Equinix’s financials emphasize how anti-fragile it is. In Q2, management reported revenues of $2.25 billion, marking a 5% year‑over‑year increase.
Recurring revenues grew by 7%, and adjusted funds from operations per share are projected to be between $33.25 and $33.91 for 2025.
Analysts forecast annual revenue growth of 7% to 10% through 2029, with an adjusted EBITDA margin of at least 52%. These figures suggest a strong foundation for future growth, even amid increased capital expenditures.
Equinix Has Global Reach
Equinix has been to growing its global footprint and inaugurated its 11th data center in France this year to support the nation’s digital economy and AI advancements.
Additionally, Equinix is enhancing its presence in Brazil, focusing on São Paulo and Rio de Janeiro, to tap into the growing demand for data center services in Latin America.
These initiatives reinforce Equinix’s position as a leader in the data center industry, catering to the needs of hyperscale companies and AI‑driven enterprises.
Yes Capex Is Concerning But..
Capex is a worry, though, because the planned increase in capital expenditures may strain short‑term profitability, affecting stock performance.
So too, market volatility lead to fluctuations in the tech sector and interest rates can influence REIT valuations.
And then there are execution risks as the success of new data center projects and AI infrastructure initiatives is contingent on timely execution and market demand.
Will Equinix Stock Double?
Although analysts see upside, a double is unlikely anytime soon and the consensus forecasts are for a rise to $956 per share with a ceiling around $1,200 per share.
Management’s investments in AI infrastructure and global footprint growth stand it well for long‑term growth. While short‑term market reactions may cause volatility, the company’s solid financials and leadership suggest a promising outlook.
For those with a long‑term perspective, Equinix presents a compelling opportunity in the evolving data center and AI landscape.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.