Equinix: A Most Sensible AI Venture

Now, one gathers from the financial chaps at Goldman Sachs (GS +1.14%) and those at FactSet that the world’s leading hyperscalers – a rather grand term, wouldn’t you agree? – are preparing to spend a sum exceeding five hundred billion dollars this year on bolstering their artificial intelligence infrastructure. A positively staggering amount, and more than double what they splashed out in 2024. The figure, naturally, is expected to climb, much like a determined mountaineer, as the AI market expands. One might say it’s a bit of a boom, what?

There are, of course, numerous ways to capitalize on this AI frenzy. But for a spot of sensible investment, something solid and reliable, one need look no further than Equinix (EQIX 0.54%). It’s a decidedly unflashy choice, perhaps, but possesses the distinct advantage of paying steady dividends – a most agreeable feature, wouldn’t you say?

What Does Equinix Actually Do?

Equinix, you see, is one of the largest real estate investment trusts (REITs) in the world, dealing in data centers. It operates over 270 of these establishments in 36 countries, spanning six continents, and caters to more than 10,000 customers – including a good 60% of the companies listed on the Fortune 500. A rather impressive clientele, wouldn’t you concur?

The firm enables its customers to communicate directly, via over 499,000 metro interconnections – a network woven through cloud-based routers and edge networking services. They claim this “Fabric” ecosystem is larger than the next ten competitors combined. A bold assertion, but one suspects not entirely unfounded. Furthermore, Equinix divides its data centers into smaller, denser units than many of its rivals, allowing it to serve a broader range of industries and smaller businesses. A clever bit of engineering, dashedly clever, indeed.

As an REIT, Equinix owns and leases these data centers, rents out the space to hyperscalers and other customers, and then shares the rental income with its investors. It’s obliged to distribute at least 90% of its pre-tax income as dividends to maintain a lower tax rate. A rather neat arrangement, wouldn’t you agree? It keeps everyone happy, and ensures a steady stream of income for the discerning investor.

How Rapidly Is Equinix Expanding?

From 2020 to 2024, Equinix’s adjusted funds from operations (AFFO) per share – a metric used by REITs to gauge profitability – grew at a compound annual growth rate of 9%, rising from $24.76 to $35.02. A respectable increase, and a testament to the firm’s sound management.

For 2025, they anticipate this figure will climb by 8%-11% to $37.95-$38.77 per share, comfortably covering its forward dividend rate of $18.76. At $816, that equates to a forward dividend yield of 2.3%. They’ve increased that payout annually for the past ten years – a reassuring sign of stability and commitment. At 21 times the midpoint of its projected 2025 AFFO per share, it still appears reasonably valued. A sound investment, one might venture to suggest.

Equinix isn’t quite the high-growth AI stock that Nvidia (NVDA 0.47%) is, naturally. But it should continue to generate stable returns as the AI market expands. And, of course, it will likely benefit from lower interest rates, which should entice yield-seeking investors back toward REITs. A most agreeable prospect, wouldn’t you say? A bit of solid, dependable growth – just what the discerning investor requires.

2026-02-02 21:14

What Does Equinix Actually Do?

How Rapidly Is Equinix Expanding?

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