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Investing.com - Jefferies lowered its price target on Equinix (NASDAQ:EQIX) to $940.00 from $990.00 on Thursday, while maintaining a Buy rating on the data center company. Currently trading at $824.31, Equinix appears overvalued according to InvestingPro analysis, though the stock maintains a "GOOD" overall financial health score.
The price target reduction reflects Equinix’s plans to significantly increase capital expenditures to meet growing enterprise AI workload demands, according to Jefferies. The firm noted that Equinix is experiencing an inflection point in enterprise AI workloads as demand for AI computing expands beyond just hyperscalers. With an $81 billion market cap and revenue growth of 5.8% in the last twelve months, Equinix shows solid fundamentals despite the capital-intensive plans.
Equinix intends to construct larger, power-dense facilities specifically designed to service the AI investments of enterprise customers. This strategic shift comes with substantial financial commitments, as the company expects annual capital expenditures of $4-5 billion per year through 2029, compared to its 2025 guidance of approximately $3 billion.
Jefferies highlighted that these investments, combined with debt refinancing headwinds, will likely cause near-term dilution to Equinix’s adjusted funds from operations per share (AFFO/sh). This dilution is expected to persist until the new AI-focused investments begin generating revenue.
Despite the near-term financial pressures, Jefferies maintained its Buy rating on Equinix stock, suggesting confidence in the company’s long-term strategy to capitalize on the expanding enterprise AI market. Analyst consensus remains strongly bullish with price targets ranging from $837 to $1,200. Get deeper insights into Equinix’s AI strategy and financial outlook with InvestingPro’s comprehensive research report, part of our coverage of 1,400+ US stocks.
In other recent news, Equinix has outlined a revised growth forecast during its Analyst Day, adjusting its adjusted funds from operations (AFFO) per share growth outlook for 2025-2029 to 5-9%, down from the previous 7-10%. This revision is attributed to increased interest rate assumptions on debt refinancing and new debt, as well as higher capital expenditures supporting its "Build Bolder" strategy. Despite this, Evercore ISI has maintained its Outperform rating with a price target of $1,035.00. Meanwhile, BMO Capital has downgraded Equinix from Outperform to Market Perform, citing a subdued growth outlook and a reduction in its price target to $850.00. On the other hand, Goldman Sachs reaffirmed its Buy rating with a $1,020.00 price target, noting the company’s focus on AI revenue opportunities. Citizens JMP continues to rate Equinix as Market Outperform with a $1,200.00 price target, highlighting potential strategic moves in the wholesale/hyperscale business segment. Raymond (NSE:RYMD) James also downgraded Equinix to Market Perform, expressing concerns about the company’s ambitious capacity expansion plans and the associated short-term challenges. These developments reflect Equinix’s strategic adjustments and the varied analyst perspectives on its future performance.
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