Equinix Stock Surges on Robust 2026 Guidance Despite Earnings Miss, Highlighting AI-Driven Optimism and Execution Risks

What happened

Equinix reported Q4 2025 earnings on February 11, 2026, missing both revenue and earnings estimates, yet the stock jumped over 12% as investors rallied behind the company's strong forward guidance. The guidance projects FY2026 revenue of $10.123–$10.223B and adjusted EBITDA margin of ~51%, representing a significant step-up in growth and profitability driven by AI-fueled demand for data center capacity. This aligns with the DeepValue report's emphasis on Equinix's connectivity-led platform and power-constrained growth bets, but the report cautions that the stock already prices in much of this outlook at elevated valuations like 56.2x EV/EBITDA. Critical risks remain, including power availability bottlenecks, regulatory scrutiny, and the pending closure of the xScale Hampton lease, which management expects in early 2026. Investors are thus betting on execution of this guidance, overlooking near-term earnings misses in favor of long-term AI infrastructure narratives.

Implication

The guidance-driven surge underscores market confidence in Equinix's AI-infrastructure exposure, but with the stock trading at rich multiples (e.g., EV/EBITDA 56.2x), there is limited upside without flawless execution of the 2026 targets. Key near-term proof points include the xScale Hampton lease closure by early 2026 and sustained interconnection growth, both highlighted in the DeepValue report as critical for validating demand quality beyond timing noise. Power constraints and policy friction, such as Ireland's new connection requirements, pose material risks to margin expansion and capacity delivery, potentially derailing the guided 51% EBITDA margin. Monitoring quarterly metrics like interconnection net adds and Fabric bookings will be essential to assess whether growth is connectivity-led or reliant on lumpy hyperscale deals. Given the high commitment load ($6.3B in capex commitments), any delays or cost overruns could pressure AFFO/share and justify the report's WAIT rating for better entry points.

Thesis delta

The new guidance reinforces the AI-demand narrative but does not alter the fundamental thesis; the WAIT rating remains unchanged, as the stock already embeds the projected step-up while execution risks around power, policy, and the Hampton lease closure persist. Investors should focus on the next 3-6 months for evidence that connectivity growth and power mitigation translate into reported results, rather than buying into the crowded optimism at current levels.