Ken Griffin Citadel Bets Big on Data Center Leader Equinix Amid Surging AI Demand
Why AI Demand Could Be a Game-Changer for Equinix
AI is creating demand in sectors previously considered tangential to tech, and Equinix is set to benefit. One of AI’s key applications lies in large language models (LLMs) like ChatGPT and Gemini, which process vast amounts of data across data centers. These models require substantial computing power to handle image generation, software coding, and rapid response to user queries. Training these generative AI models is an ongoing, resource-intensive process, and that’s where Equinix’s extensive infrastructure becomes essential.
In Equinix’s recent earnings call, CEO Adair Fox-Martin highlighted parallels between AI and the rise of cloud computing, which transformed data processing and storage capabilities over a decade ago. Fox-Martin noted that AI training workloads are already accelerating demand for Equinix’s services, with AI-driven requirements expected to evolve as adoption increases.
Long-Term Prospects for Equinix in a Digital Economy
Much like the early cloud era that fueled demand for Amazon Web Services (AWS), Google Cloud, and Microsoft Azure, AI is shaping up as a trillion-dollar opportunity for IT infrastructure companies. Equinix’s offerings—including its xScale suite for hyperscale infrastructure—position it to capture market share as enterprises continue integrating AI to drive efficient data processing.
Fox-Martin emphasized the strategic role Equinix plays as an “optimal connectivity solution” for clients who need efficient data handling and storage solutions. As AI use cases mature, Equinix’s extensive network of data centers could serve as critical nodes for digital infrastructure growth, paralleling the transformation cloud providers saw over the past decade.
Is Equinix Stock a Good Buy Now?
From a valuation perspective, Equinix trades at a high forward price-to-earnings (P/E) ratio of around 80, comparable to peers like Digital Realty and Iron Mountain. This premium reflects investor expectations that data centers will continue seeing strong demand as the AI landscape expands. While Equinix’s valuation is higher than the S&P 500 average of 23, institutional investors like Citadel seem confident in the company’s potential as AI adoption grows.
The robust demand for data processing and storage infrastructure is evident as both Equinix and its peers have seen notable valuation expansions in recent months. Citadel’s aggressive position in Equinix reflects growing interest among institutional investors, signaling a broader recognition of the data center sector as a hidden gem within the AI ecosystem.
In the coming weeks, investors will be watching third-quarter 13F filings to see if other Wall Street firms follow Citadel’s lead by adding to their positions in data center stocks. For now, as AI platforms advance and digital transformation continues, Equinix’s stock is a name worth watching for those seeking exposure to the intersection of AI and digital infrastructure.
Amazon subsidiary Whole Foods Market’s former CEO John Mackey is a board member of The Motley Fool. Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Adam Spatacco owns shares of Alphabet, Amazon, Microsoft, and NVIDIA. The Motley Fool recommends positions in several of the mentioned stocks, including Equinix and NVIDIA.
