AI Spending Doubles: Why This $500 Billion Boom Makes Equinix a Buy for 2026
Key Points
Equinix is one of the world’s largest data center operators.
Its business is booming as the AI market continues to expand.
Its stock is reasonably valued, and it pays a decent dividend.
- 10 stocks we like better than Equinix ›
The world's top hyperscalers could spend more than $500 billion to expand their artificial intelligence (AI) infrastructure this year, according to Goldman Sachs' (NYSE: GS) and FactSet's latest estimates. That's more than double their $237 billion in capex in 2024, and that figure should keep climbing over the next few years as the AI market expands.
There are plenty of ways to capitalize on that AI boom. However, Equinix (NASDAQ: EQIX) is one of the simplest and safest plays on that secular expansion, and it pays steady dividends.
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What does Equinix do?
Equinix is one of the world's largest data center real estate investment trusts (REITs). It operates more than 270 data centers in 36 countries across six continents, and it serves over 10,000 customers -- including roughly 60% of the Fortune 500.
Equinix enables its customers to directly communicate with each other via over 499,000 metro interconnections, which weave through its cloud-based routers and edge networking services. It claims this "Fabric" ecosystem is larger than the "next 10 competitors combined". It also splits its data centers into smaller, denser units than many other data center REITs, allowing it to serve a broader range of industries and smaller businesses.
As an REIT, Equinix owns and leases data centers, rents out that space to hyperscalers and other customers, and splits the rental income with its investors. It's obligated to pay out at least 90% of its pre-tax income as dividends to maintain a lower tax rate.
How fast is Equinix growing?
From 2020 to 2024, Equinix's adjusted funds from operations (AFFO) per share, which REITs use to gauge their profitability, grew at a CAGR of 9% from $24.76 to $35.02.
For 2025, it expects that figure to rise 8%-11% to $37.95-$38.77 per share, easily covering its forward dividend rate of $18.76. At $816, that equals a forward dividend yield of 2.3%. It's raised that payout every year since its conversion into an REIT ten years ago. It also still looks reasonably valued at 21 times the midpoint of its projected 2025 AFFO per share.
Equinix isn't a high-growth AI stock like Nvidia (NASDAQ: NVDA), but it should continue to generate stable returns as the AI market expands. It will also likely benefit from lower interest rates, which should drive more yield-seeking investors back toward REITs.
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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix, Goldman Sachs Group, and Nvidia. The Motley Fool has a disclosure policy.
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