Sustainable Growth Advisers, LP on Equinix, Inc.
Thesis
SGA re-entered Equinix after growth reaccelerated and its leadership transition was completed. Roughly 95% of revenue is recurring under multi-year contracts, while low churn, high migration costs and a dense interconnection ecosystem create strong retention and pricing power. The company is positioned to benefit from AI inferencing, enterprise connectivity, digital ecosystems and rising demand for distributed data-intensive workloads. Management has reported strong bookings, record-low churn and demand that continues to outpace supply. SGA believes these network effects and contracted revenues make Equinix a durable long-term compounder.
“We continue to view Equinix as a high-quality, long-term compounder”
Key risks
- AI-driven demand may translate into bookings and deployments more slowly than expected
- Competition from cloud providers and wholesale data-center operators
- Rising power costs and inflationary pressure