Data centre market outlook

Real Estate

Kolytics

Kolytics’ report, the first in a series on the data centre sector, examines how the landscape is evolving amid surging AI-driven demand, mounting infrastructure pressures and a shift in focus from compute capacity to power availability. As the AI revolution transitions from hype to application, investor attention is shifting from core performance to grid access as the primary constraint. While current market conditions remain favourable and landlords benefit from pricing power amid grid bottlenecks, elevated valuations leave limited room for execution missteps. Risk-adjusted opportunities remain attractive; however, the materialisation of substantial downside risks could swiftly reshape the outlook. REITs covered include Digital Realty, Equinix and Iron Mountain.

- 08 August, 2025

Technology Spending Intentions Survey

ETR

ETR’s July 24 TSIS saw participation from 1768 IT Decision-Makers, including 293 Fortune 500 and 419 Global 2000 organisations. Highlighted vendors include:

Equinix (EQIX) - rising sector and vendor-level spending intent places EQIX in a dominant position among peers, as the vendor seems well-aligned with broader IT spending and ML/AI trends, warranting ETR’s first-ever positive outlook on the data set.
Salesforce (CRM) - souring spend intent for its core Enterprise Apps business, in tandem with overall Net Score in Cloud Computing registering sharp declines, warrants a negative outlook.
Varonis (VRNS) - Negative outlook. ETR has observed a clear declining trend in spending intentions for two years, with an even lower Net Score among the Global 2000 and a sharp rise in Replacement intentions among existing customers.

- 26 July, 2024

Field comments on spending on compute, data centre and edge build outs for AI

Technology

Sales Pulse Research

1) Data centre operators are running out of space, pre-selling new space and in some cases, aggressively looking to purchase space from end users - beneficiaries include Equinix and Digital Realty Trust. 2) Examples of hyperscalers, enterprises and innovative new AIaaS operators rapidly building compute. 3) Cloud optimisation efforts being viewed as “new normal” vs. temporary headwind. 4) After years of hype but slow growth for edge computing there is evidence that use cases are developing and demand is picking up - Crown Castle was mentioned by multiple industry contacts as benefitting from MEC and Lumen from increased demand for fibre connectivity. 5) Some interesting new data centre operators with well-timed AI infrastructure: Denvr Dataworks, Applied Digital and Napatech.

- 07 July, 2023

Are you finding short ideas the right way?

Trivariate Research

Adam Parker of Trivariate Research provides a framework for finding “melting ice cubes” - he evaluated prior price performance (momentum over previous 12 months), accruals (disconnects between earnings and FCF), revenue (share loss), gross margins (relative to industry group contraction), earnings declines and downward earnings revisions as potential candidates for “cube identification”. Adam found that no other major fundamental attribute comes close to achieving the level of success at predicting subsequent underperformers as either accruals or momentum. Fundamental analysts who focus disproportionately on revenue share gain and margin contraction to find short ideas are wasting their time. Short ideas include Home Depot, Equinix and Micron.

- 17 March, 2023

Equinix (EQIX) & Digital Realty Trust (DLR)

Real Estate

New Constructs

Data centres are dinosaurs - bulls have long argued that data centre operators, given their ties to data usage and the internet, deserve premium valuations. New Constructs disagree. They see poor / risk reward in both these stocks due to 1) Years of declining profitability. 2) Low pricing power in a commoditised industry. 3) Deep-pocketed customers becoming competitors. 4) Declining utilisation (overbuilding in good times). 5) Rising cost of commercial real estate makes improving ROIC unlikely. 6) Stock prices that imply immediate reversal in declining margins and years of above consensus growth. 60-80% downside.

- 27 May, 2022

Equinix (EQIX)

Real Estate

Behind the Numbers

When the market digests the fact that the company is not self-funding, the degree of dilution it is incurring to fund growth, and that the dividend is far outgrowing the organic growth rate, the stock price could be more than cut in half. While data centres might be a hot investment right now, BTN’s analysis underlines the importance of paying close attention to a company’s underlying performance in addition to highlighting several earnings quality concerns.

- 14 May, 2021