Equinix reports tight AI capacity constraints in Dallas and sees significant pricing power from colocation demand.
Equinix raised its long-term outlook, targeting annual revenue growth of 10% to 13% and adjusted funds from operations (AFFO) per-share growth of 9% to 12%, supported by durable customer demand, limited new supply, and barriers to entry. The company's executives attributed the improved guidance to tight capacity conditions and continued demand for interconnected digital infrastructure across key U.S. markets.
Guy Danskine, Equinix's Managing Director of West Americas, a newly created regional role overseeing Texas, Illinois, California, and other western U.S. markets, emphasized the company's focus on understanding demand durability through extensive customer conversations. "The more of those conversations we've had, the more conviction we've had just around our forward-looking guidance," Danskine said. The regional-management approach adds discipline around sub-regional asset optimization, capital returns, and risk mitigation.
Capacity remains the company's top operational priority. Equinix is working to recover and optimize available space and power in existing facilities through equipment refresh cycles, replacing aging power distribution units and computer room air handler units to improve efficiency and enable higher power density. New facilities are being designed to accommodate liquid cooling and other advanced technologies, with customers in next-generation builds seeking cabinet densities ranging from 40 kilowatts to more than 60 kilowatts per cabinet—a shift that fundamentally changes site design requirements.
Dallas is emerging as a particularly important growth market, with Equinix viewing its Texas exposure primarily through the Dallas lens rather than West Texas. The company's activities center around its Infomart asset, acquired roughly seven or eight years ago, with planned expansions focused on proximity to that facility due to economic advantages. Danskine called Dallas "one of Equinix's leading global markets," citing its interconnected infrastructure, available land, relatively strong power availability, financial-services activity, and business environment. Equinix assets and planned expansions largely fall below the 75-megawatt threshold discussed by Texas state officials.
Chicago remains a major market, particularly for financial-services customers requiring high-frequency trading infrastructure in the downtown area, while back-office workloads can be located farther away. Equinix is expanding in the Chicago metro with a hybrid xScale campus in Minooka and expects enterprise demand to extend across the market. Silicon Valley continues to support financial services and enterprise demand despite higher construction and energy costs, as some customers require a presence for proximity to other customers, employees, and investors.
AI is significantly increasing demand for interconnection and distributed infrastructure. Equinix recorded a quarterly record of 9,700 net interconnections, driven by both traditional customer workloads and an accelerator layer associated with early-stage artificial-intelligence adoption. Ryan Burke, Equinix's Vice President of Investor Relations, noted that interconnection demand often follows deployment of space and power, with customers increasingly requiring distributed workloads, data, and network connectivity. Danskine added that network density is forming around neocloud providers and large language model ecosystems as companies shift focus from securing compute capacity to distributing that compute to end users.
The company is expanding managed solutions to help customers enable infrastructure within Equinix facilities, targeting specific customer segments in each metro, including network components of neocloud deployments. The focus is on inferencing and networking layers rather than AI training workloads. Equinix has approximately 3 gigawatts of land and power secured or near secured, with high certainty around projects in its reported development pipeline.
Danskine noted that Equinix's announced power requirements are largely under control and that its 20- to 25-year presence in many markets supports beneficial utility relationships. Unlike developers seeking very large amounts of power immediately, Equinix can provide utilities with more predictable demand schedules. Looking ahead, the company is closely managing supply-chain complexity and the shortage of qualified data-center workers, collaborating with communities and educational institutions to increase awareness of data-center careers and broaden the available talent pool.