- Equinix said mounting barriers to new data center construction, including power shortages, local opposition and new legislation, will make its existing capacity more valuable and could give it room to charge more.
- “If there are a number of projects canceled, then it only makes what is already scarce capacity much more of a scarce resource,” CEO Adaire Fox-Martin told analysts on Wednesday’s call.
- Demand is strong. Annualized gross bookings rose 35% to a record $533 million, and Equinix aims to deliver almost 40% more server cabinets this year than it initially planned.
- Its footprint lowers execution risk. About 80% of new capacity expansion is in markets where Equinix has long operated, it has 48 projects underway, and its sites typically need less power than hyperscale developments, making them easier for utilities to serve.
What Happened?
Equinix, one of the world’s biggest data center companies, reported results Wednesday. CFO Olivier Leonetti said having 48 projects spread across geographies gives it flexibility if individual developments are delayed: “If one maybe goes to the left, the other one usually goes to the right.” Fox-Martin acknowledged concerns about power availability, saying, “We’re not tone deaf for sure.” The stock has climbed 32% this year.
Why It Matters?
The same constraints that are delaying new AI data centers, such as Texas’s pause on new projects, can benefit incumbents with existing, powered capacity. For data center REITs, scarcity supports pricing on renewals and new leases, a tailwind that may persist as long as grid and permitting bottlenecks last.
What’s Next?
Watch whether Equinix translates the scarcity into higher pricing in coming quarters, and whether rising project cancellations across the industry show up in its bookings. Investors will also track how power constraints and state-level moratoriums evolve after the Nov. 3 midterm elections.
Affected Tickers and Coins: EQIX, DLR, SRVR
Source: Bloomberg
