Equinix Q3: Bookings Surge, Guidance Raised, but Capex Watch Intensifies

What happened

Equinix reported Q3 2026 with record annualized gross bookings of $533 million, up 35% year over year, driven by robust demand and strengthening pricing. Monthly recurring revenue grew double digits year over year for the fourth consecutive quarter, and interconnection revenue rose 10% year over year, with Fabric revenue up 24%. Management raised full-year 2026 guidance for the third consecutive quarter and accelerated capacity delivery, planning nearly 40% more cabinets than initially anticipated. This follows a period where capex already rose to $2.834 billion in 1H 2026 versus $1.739 billion a year earlier, and 2027-2029 annual capex guidance was raised to $5-7 billion from $3-4 billion. The market now treats Equinix as an AI-infrastructure winner, but the key risk is whether increased capital spending translates into durable AFFO per share growth without further balance sheet strain.

Implication

The Q3 report reinforces Equinix's demand leadership, with record bookings and raised guidance supporting the bull case. However, investors should scrutinize the incremental capex needed to deliver 40% more cabinets, as this could keep free cash flow negative for longer. The raised guidance suggests management is confident in near-term revenue, but the market already prices in much of this strength at 69x P/E and 31.8x EV/EBITDA. Watch for commentary on power constraints and permitting delays in the 10-Q, as those remain key execution risks. A prudent approach is to hold current positions but wait for a better entry near $950 before adding, or consider trimming above $1,160 if capex guidance rises again.

Thesis delta

The Q3 results confirm the demand thesis but increase attention on supply execution and capital intensity. The record bookings and raised guidance are positive, yet the acceleration in capacity delivery means higher near-term capex, which could pressure AFFO and free cash flow. The overall rating remains WAIT, with no change to the entry and trim levels, but the next 1-2 quarters of filings will be critical to see if the spending is matched by cash conversion.