Equinix gains as record bookings bolster AI data centre growth outlook

Equinix's record third-quarter bookings and stronger-than-expected operating performance have reinforced Mizuho Securities' bullish outlook on the data centre operator, with the brokerage reiterating its top stock pick as demand for AI infrastructure continues to outpace available capacity. 

Mizuho maintained its Outperform rating and $1,275 price target, implying more than 25% upside from the $1,007.66 share price cited in its October 29 report. The brokerage said the company's results highlighted strong underlying demand despite broader macroeconomic concerns and could help its shares outperform other AI-related investments.

Mizuho's bullish thesis rests on sustained demand for AI-related infrastructure, record customer bookings, pricing opportunities and disciplined capacity expansion. The brokerage believes Equinix's operating performance provides evidence that data centre demand remains strong and that the company is well positioned to benefit from the expansion of AI infrastructure spending.

The strongest signal came from annualised bookings, which crossed the $500 million mark for the first time, reaching $533 million, up 35% year over year. Including smaller pre-sales, bookings totalled $562 million, comfortably exceeding Mizuho's $480 million estimate. The brokerage attributed the performance to tight data centre capacity and limited available supply.

Capacity expansion remains another important growth driver. A new joint venture with atNorth adds an 800-megawatt development pipeline over the next five years, with an option for another 1 gigawatt of future expansion. This builds on Equinix's existing 3-gigawatt developable capacity pipeline, around 80% of which is concentrated in its top 25 metropolitan markets.

Mizuho said the diversified nature of Equinix's development portfolio should help limit exposure to local regulatory hurdles and opposition to new construction. Management is developing smaller projects across multiple locations, reducing reliance on individual sites.

Equinix maintained its long-term AFFO growth target of 9% to 12% annually between 2027 and 2029. However, Mizuho believes stronger bookings and capacity constraints could make that forecast conservative. The brokerage also expects EBITDA margins to exceed 53% by 2029, compared with management's near-term guidance of 49% to 50%.