Bank of America anticipates that Equinix, a data center stock, will continue to build on its already impressive performance this year, providing investors with further gains. The bank reaffirmed its buy rating on Equinix shares and raised its price target from $750 to $850, implying a potential upside of approximately 14% based on Thursday’s closing price of $746.99.
While Equinix primarily focuses on network communications, analyst David Barden believes that the revenue expectations following Equinix’s recent investor day do not fully account for the opportunities presented by artificial intelligence (AI). During the investor day, Equinix discussed its plans for expanding its cloud segment and emphasized its strong position in managing the supply and demand dynamics of the industry. BofA highlighted these factors as positive indicators.
Barden referred to a conversation with Equinix CEO Charles Meyers, who cited industry reports projecting a total addressable market (TAM) of $60 billion for “AI Infra” by 2027, with a serviceable addressable market (SAM) of $21 billion specifically applicable to Equinix. While the full potential of the AI opportunity has yet to be realized, deeper investments in this field could create favorable business conditions for Equinix in the future.
Barden acknowledged that the impact of this trend may take time to materialize significantly, but he expressed appreciation for the long-term prospects it offers. Equinix stands out as Bank of America’s preferred data center pick due to its robust balance sheet, evident pricing power, and its position as a potential beneficiary of the growing demand for AI.
Equinix shares have experienced a 14% increase year-to-date, and over the past month, the stock has outperformed the S&P 500 with a gain of 7.2%.
