Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Communications Infrastructure in North America, specifically the colocation data center sector [1][7] - **Market Sentiment**: The overall industry view is in-line, indicating stable expectations for growth [7] Company Insights - **Equinix (EQIX)**: - Estimates for EQIX have been raised due to strong bookings momentum and lower operating expenses [1] - The company reported a record bookings increase of 25% in Q3 [4] - Expected AFFO (Adjusted Funds from Operations) per share growth of 6.4% year-over-year in 2026, with revenue growth estimated at 8.7% [12][53] - Price target set at $950 for YE26, implying approximately 20% upside potential [14] - **Digital Realty (DLR)**: - DLR reported a near-record backlog of $852 million in Q3 2025 [4] - Expected revenue growth of around 10% in 2026, in line with consensus estimates [13] Demand Trends - **Robust Demand**: - Strong demand for both colocation and AI-based workloads is evident, with enterprises expected to continue migrating from on-premise data centers to colocation facilities [5][10] - The volume of global data generated is projected to grow at a CAGR of approximately 25% through 2029, driving demand for storage and compute capacity [35] - **CIO Survey Insights**: - Recent CIO surveys indicate a shift in spending priorities, with a notable willingness to cut on-premise data center buildouts, which is favorable for colocation operators [10][24] - The top six IT spending projects expected to see the largest increases in 2026 are all linked to colocation data centers [33] Cost Analysis - **Capex to Opex Conversion**: - A new analysis shows that enterprises can save approximately 15% by choosing colocation over building on-premise data centers [11][26] - The total cost of ownership analysis favors renting space and services from third-party data centers [26] AI and Future Growth - **AI Workloads**: - Sustained demand for AI model training and inference workloads is expected to benefit both EQIX and DLR, with significant contributions anticipated from AI-related revenue by 2030 [42][47] - TSMC's increased capex guidance to $52-56 billion is seen as a bullish indicator for AI-related compute demand [45] Market Dynamics - **Cloud Capex Tracker**: - The tracker indicates a projected 61% year-over-year growth in cloud-related capex in 2025 and 35% in 2026, which is beneficial for colocation providers [52] - **Telecom and Data Traffic**: - The growth in mobile network data traffic, driven by 5G and 6G deployments, is another tailwind for colocation data center growth, with a projected 27% CAGR in US wireless data usage through 2029 [37][41] Conclusion - The colocation data center industry is poised for growth driven by robust demand, favorable cost dynamics, and increasing enterprise IT spending, particularly in AI and cloud services. Both Equinix and Digital Realty are well-positioned to capitalize on these trends, with strong financial forecasts and strategic initiatives in place.