Sustainable Growth Advisers, LP - Global Growth Composite on Equinix, Inc.
Thesis
SGA returned to Equinix after previously owning the company for a decade, believing that both its growth slowdown and leadership transition have reversed. Approximately 95% of revenue is recurring, customer churn is historically low, and the interconnection ecosystem creates meaningful switching costs and network effects. AI inferencing, enterprise connectivity, digital ecosystems, and geographically distributed workloads should drive a renewed growth cycle while demand continues to exceed supply. The fund believes Equinix can sustain premium pricing because replicating its carrier-neutral global ecosystem would be difficult and time-consuming.
“We continue to view Equinix as a high-quality, long-term compounder underpinned by significant pricing power from ecosystem-driven network effects, highly recurring contracted revenue, and structural growth tied to AI inferencing, digital exchanges, and the rising need for customers to interconnect globally.”
Key risks
- AI-driven demand may translate into bookings and deployments more slowly or unevenly than expected
- Competition from cloud providers and wholesale data-center operators
- Rising power costs and broader inflationary pressures