Equinix falls 3% as soft Q3 guidance eclipses raised 2029 growth targets
Equinix shares dropped 3% after a weaker-than-expected third-quarter revenue forecast offset a significant upgrade to the data centre operator's long-term growth targets driven by AI demand.
Equinix shares declined 3% on Wednesday after the data centre operator issued a third-quarter revenue forecast that fell short of Wall Street expectations. The company projected revenue between $2.53 billion and $2.58 billion for the current period. The midpoint of that guidance missed analysts' consensus estimate of $2.58 billion, triggering an immediate sell-off.
The near-term caution contrasted sharply with stronger actual second-quarter results and a dramatically improved long-term outlook. For the second quarter, Equinix reported revenue of $2.63 billion, comfortably beating analyst estimates of $2.58 billion. This performance was driven by a client roster that includes major technology players like Nvidia, Netflix and Adobe.
Looking further out, management raised its 2026 revenue forecast to a range of $10.21 billion to $10.29 billion, up from a previous range of $10.14 billion to $10.24 billion. More significantly for long-term investors, the company projected annual revenue growth of 10% to 13% through 2029. This is a substantial acceleration from its prior target of 7% to 10% growth.
Profitability metrics also received upward revisions. Adjusted funds from operations per share, a critical metric for real estate investment trusts, are now expected to grow 9% to 12% annually through 2029. That compares favorably to a previous estimate of 5% to 9%. For the current full year, Equinix lifted its AFFO forecast to a range of $42.69 to $43.29 per share, up from $42.31 to $43.11.
The market's strict focus on the immediate third-quarter miss highlights a persistent tension in how investors value infrastructure providers. Despite structural tailwinds, short-term sentiment remains heavily tethered to quarterly guidance precision. Equinix operates 281 data centres globally, providing secure, power-efficient space to house IT equipment alongside connectivity solutions.
Management attributed its upgraded long-term trajectory to demand that remains both broad-based and growing. The company stated it is well positioned to meet the networking, cloud and AI infrastructure needs of enterprises globally. For market participants, the reaction underscores that even clear upgrades to multi-year AI-driven demand are not enough to insulate a stock from a modest quarterly guidance shortfall.
