Equinix To Spend Up To $5B Annually Building Data Centers To Meet AI Demand

Equinix is ramping up spending on data center development to accelerate the expansion of its portfolio — an investment surge driven by what the firm’s leadership calls a new phase of corporate adoption of artificial intelligence. 

The world's largest data center REIT plans to substantially increase its investment in building new data centers for the next half-decade, Equinix leaders said on its second-quarter earnings call Wednesday.

In 2025, the firm’s total capital expenditures are expected to jump as much as 47% — from $3.4B in 2024 to as much as $5B this year — with the bulk of that spending devoted to expanding the company’s data center footprint. Equinix expects to spend up to $5B each year through 2029. 

While the global data center construction boom has largely been defined by the development of enormous campuses for the world's leading technology firms, frequently in locations far removed from established data center hotbeds, Equinix’s leadership said the firm’s capex surge will instead focus on delivering blocks of capacity for enterprise clients in the industry’s most important — and most power-constrained — hubs. 

“Our capital expenditures and data center expansion are grounded in the demand signals we see from our customer base,” Equinix CEO Adaire Fox-Martin said on its earnings call Wednesday. “Organizations are moving beyond the experimentation and pilot phase of AI adoption into the phase of agentic integration and automation.”

Equinix’s leadership detailed the development push Wednesday, following the release of strong Q2 earnings in which the firm increased its annual guidance across all of its key operating metrics. 

Revenue jumped 5% year-over-year to nearly $2.3B, boosted by strong leasing activity leading to $345M in annualized gross bookings. With the firm’s leasing pipeline accelerating since the end of Q2, Equinix raised its full-year revenue guidance by $58M and upped its expected annual growth rate to between 7% and 8%. 

Equinix’s five-year development push is already underway. In the second quarter, Equinix’s nonrecurring capital spending, the bulk of it for new development, spiked to $934M from $603M a year earlier. The company has 59 major development projects in progress globally, adding to its portfolio of 272 existing data centers across 76 different metro areas. 

Nearly 60% of the firm’s development capex in the coming years will be devoted to supporting the build-out of retail colocation data centers. Such facilities have long been the firm’s bread and butter, although in recent years there has been a growing focus on its xScale single-tenant facilities built through development JVs. These JVs will account for less than $1B of Equinix’s annual capex. 

Equinix’s development pipeline will also be heavily skewed toward major markets, Fox-Martin said. Over the past quarter, Equinix has added nine new retail projects in primary markets, including Chicago, Dallas, Silicon Valley and London.

This expansion of retail capacity in major markets is being driven by demand for AI inference and a maturing of how corporate tenants understand the potential of these new technologies, according to Fox-Martin.

Enterprises aren’t just experimenting with AI anymore. They are increasingly looking to tactically deploy AI agents and automation in ways that are central to their operations, she said. This means investing in deploying their own AI computing infrastructure in ways that Equinix is particularly well suited to fulfill. 

“Customers’ priorities are unique, but Equinix is uniquely positioned to address these priorities,” the CEO said on the earnings call.

Ever since the release of ChatGPT launched an AI arms race that sent data center demand into overdrive, Equinix’s leadership has maintained that the company’s main AI opportunity wasn't in massive facilities to train AI models but in providing critical infrastructure in major markets for enterprises once AI adoption and inference took hold.

That moment has arrived, Fox-Martin said Wednesday. 

She said tenants are increasingly desperate for blocks of capacity that are close to end users, with strong interconnection to facilities operated by hyperscale cloud providers to run “hybrid” infrastructures that incorporate computing from cloud providers and that they deploy themselves. They need these deployments across multiple markets, due to latency and data sovereignty issues. 

“AI inference use cases are growing,” Fox-Martin said. “We believe our leading market share of cloud on-ramps … will be vital to address the increased bandwidth and multicloud connectivity these workloads will require.”

Nearly all of the primary markets in which Equinix is focusing its expansion plans face severe power constraints that have limited data center development and pushed large-scale projects farther afield. But Equinix leaders said that the company’s existing footprints within the most constrained markets give it a leg up when it comes to building new projects.

Beyond accessing new blocks of power, having existing tenant relationships within these markets — and tailoring expansion projects to the needs of those tenants — allows Equinix to utilize new power capacity more efficiently than other retail data center providers.

At the same time, tenants’ desperation for capacity in these core markets and their willingness to pay a premium for it lowers the risk associated with these development projects. 

“By prioritizing our large markets, we can leverage our diverse and deep customer relationships and our in-place operating capabilities to de-risk our investment plans and drive efficiencies at scale,” Fox-Martin said. “We see a path to drive the business to double-digit revenue growth as our … strategy becomes fully operational.”