Equinix (EQIX) Named TD Cowen's Top 3 Best Ideas Post C1Q25 Update

TD Cowen analyst Gregory Williams reiterated a Buy rating and $974.00 price target on Equinix (NASDAQ: EQIX).

The analyst commented: "Our three favorite ideas are (1) Uniti (UNIT, Buy), (2) T-Mobile (TMUS, Buy), and (3) Equinix (EQIX, Buy). Our three previous favorite ideas were (1) Uniti (UNIT, Buy), (2) Cogent (CCOI, Buy), and (3) DigitalBridge (DBRG, Buy).

Equinix reported upside 1Q25 financial results, downside KPIs, mixed 2Q25 guidance, and raised its 2025 guidance for revenue, EBITDA, and AFFO/share. Subsequently, at its recent Analyst Day, mgmt. updated LT guidance including 1) organic revenue growth of 7-10% through 2029, 2) +52% EBITDA margins by 2029, 3) 5-9% AFFO/share growth, and 4) $4-5B per year in capex through 2029. The higher capex was greater than investors expected, which coupled with the long cycle time between capex spend on facility construction and initial revenue generation (i.e., two to three years), put greater pressure on AFFO/share than expected, pushing AFFO/share down to 5% in 2026 before ramping from there. In our view, the higher capex is necessary as 1) enterprise deal sizes have increased notably in the last year, and 2) the company needs to be positioned with supply to capture demand associated with AI inference. We continue to have conviction based on our channel checks that AI inference data center demand is growing on the hyperscale side and believe this will translate into enterprise inference demand which will become a secular growth driver for Equinix given its market leading position of cloud on-ramps and the depth of its interconnection ecosystem. Given the opportunity set associated with AI inference, coupled with the increasing size of enterprise deals which is requiring enterprise data centers to increase in size, we view Equinix's capex ramp as key to supporting durable growth in an evolving and growing data center market, although it will result in NT AFFO/share pressure. Net/Net: Equinix sold off ~12% since its Analyst Day as investors broadly view the stock as "dead money" in the NT as it works through trough earnings with limited NT catalyst to drive the stock higher. While we agree that proof points are needed for the stock to work, we believe its current valuation levels provide an attractive entry point for investors looking to invest in the multi-year AI inference thematic."

For an analyst ratings summary and ratings history on Equinix click here. For more ratings news on Equinix click here.

Shares of Equinix closed at $795.15 yesterday.

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