Sustainable Growth Advisers, LP on Equinix
Thesis
SGA reinitiated Equinix as growth reaccelerated with AI inferencing and power demand while a prior leadership transition was resolved. Roughly 95% of revenue is recurring and multi-year contracted, with low churn and meaningful switching costs once customers are embedded in Equinix's interconnection ecosystem. Network effects support premium pricing and attractive returns on new investment as more customers, networks and partners connect through the platform. SGA sees structural growth from AI workloads, enterprise connectivity, digital ecosystems and globally distributed computing.
“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 or unevenly than current expectations.
- Cloud providers and wholesale data-center operators could intensify competition in retail colocation.
- Rising power costs and broader inflationary pressures could weigh on profitability.