Baron Sees Data Growth Supporting Equinix’s Long-Term Case

Baron Capital says exponential data growth and early enterprise AI adoption support the long-term case for Equinix (NASDAQ: EQIX), which its Baron Real Estate Income Fund holds. The fund says data centers benefit from demand for cloud services, internet traffic and AI, alongside limited power and space.

Baron’s Q2 letter argues that enterprise AI is still in its early stages. As companies use AI more widely, the fund expects additional spending on digital infrastructure to reinforce existing demand for data center space.

Equinix’s recent results offer evidence of current demand. In the second quarter, revenue rose 16% year over year to $2.625 billion, and monthly recurring revenue grew 11%. The company also recorded 9,700 net new interconnections, a quarterly high.

The company raised its 2026 outlook, forecasting revenue growth of 11% to 12% and adjusted funds from operations per share growth of 10% to 12%. It also expects annual revenue growth of 10% to 13% through 2029.

Equinix is also pursuing enterprise AI services. It announced an inference offering with NVIDIA and Together AI, combining data center infrastructure and network connections with AI systems and software. The company expects the service to become available in the first quarter of 2027.

Growth will require substantial investment. Equinix’s second-quarter filing said it had 52 capacity projects underway across 33 markets, while the company’s increased spending plans underscore the cost of adding power, cooling and space.

For investors, the key question is whether new AI workloads add durable revenue beyond Equinix’s established cloud and connectivity business. The fund’s thesis rests on long-term demand; the new inference service has yet to launch, so its commercial contribution remains to be demonstrated.