Key Points
- Equinix beat Q3 earnings expectations, with strong AFFO and EPS results offsetting slightly weaker revenue and lowered full-year guidance.
- AI infrastructure demand and record bookings are helping Equinix recover from its summer sell-off and rebuild investor confidence after accounting controversy.
- Enterprise client caution amid tariff uncertainty continues to weigh on short-term revenue growth, but long-term fundamentals for EQIX stock remain strong.
Shares of Equinix Inc. (NASDAQ: EQIX) are up more than 6% after the data center operator delivered a mixed third-quarter earnings report. The company delivered a strong earnings per share (EPS) beat, with its $3.89 EPS surpassing estimates of $3.41 by 13.4%. Equinix also beat analysts’ expectations for Adjusted Funds from Operations (AFFO) by 18% at $9.83 per share and raised its forecast for full-year growth in AFFO per share to a range between 8% and 10%.
All of that helped to offset some softness on the top line. Revenue of $2.32 billion came in slightly lower than the expected $2.33 billion. The company also lowered its revenue guidance for the fourth quarter and full year.
That said, Equinix reported continued acceleration in monthly recurring revenue, which grew about 8% year-over-year (YoY). Equinix also reported a record $394 million of annualized gross bookings and a pre-sold backlog of $185 million.
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A Beneficiary of the Supply-Demand Imbalance
This is the peak of the earnings season, and many of the largest technology stocks are reporting. The consensus among hyperscalers is that demand for AI infrastructure still surpasses supply, suggesting that capital expenditure on data center infrastructure will rise in 2026.
That may not be good news for those stocks, but it’s great news for EQIX. The company currently operates about 270 data centers and is well-positioned to capture more market share as this buildout continues.
Equinix Lowers Its Guidance Citing Macroeconomic Pressure on Enterprise Demand
Equinix lowered the bottom end of its full-year revenue guidance. The company is now forecasting full-year revenue to come in around $9.21 billion to $9.33 billion. That’s down from its prior forecast of between $9.23 billion and $9.33 billion.
This is because the company has also lowered its fourth-quarter revenue forecast to a range of $2.41 billion to $2.53 billion. The midpoint of that guidance ($2.47 billion) is above the consensus estimate of $2.45 billion.
This isn’t without reason. Equinix is a key enabler of artificial intelligence (AI) infrastructure. However, a significant portion of its revenue base comes from enterprise customers, rather than hyperscale cloud providers like Microsoft Corp. (NASDAQ: MSFT) or Meta Platforms Inc. (NASDAQ: META).
These enterprise clients rely on Equinix to manage their hybrid and multi-cloud architectures; however, their spending is cyclical and sensitive to macroeconomic pressures. In 2025, this means tariff uncertainty, which Equinix cites as leading to slower deal flow and more uneven bookings.
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EQIX Stock Is Making Up for Lost Time
Investors, however, are taking a “lower guidance, no problem” approach. This may indicate that a catch-up trade is in progress. Even after this rally, EQIX stock is still down 10.7% in 2025. Much of that is due to the sharp sell-off of more than 20% in Equinix stock this summer.
That came because Equinix was the target of a short report from Hindenburg Research. The report alleged that the company misclassified certain expenses as capital expenditures, which inflated its AFFO, a key profitability metric for REIT investors.
Although Equinix denied the allegations, the damage had already been done. Analysts from JPMorgan Chase and Citigroup downgraded EQIX stock, and reports came out that the U.S. Securities & Exchange Commission (SEC) might review certain accounting practices within the entire data center REIT sector.
History Paints a Bullish Picture for EQIX Stock
Despite being down 7.5% over the last 12 months, EQIX stock has delivered a strong total return over any meaningful time period. The company is also trading at a price-to-earnings (P/E) ratio that is below its historic average, even at 82x.
Additionally, as is the case with all REITs, investors receive a generous dividend, with an annual payout of $18.76 per share.
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