Equinix, Inc. (EQIX - Free Report) and Singapore's sovereign wealth fund, GIC, recently completed the formation of a limited liability partnership worth more than $1 billion announced in July.
The joint venture (JV) will develop and operate xScale data centers in Europe. Initially, six facilities in the JV will be located in the Amsterdam, London (two sites), Frankfurt (two sites) and Paris.
The initial facilities provided through the JV will cater to specific workload deployment needs of targeted group of hyperscale companies, including preeminent cloud service providers. These facilities situated on or close to some of Equinix's existing IBX campuses will enable companies to streamline continued growth. As enterprises rapidly adopt hybrid multi-cloud, the same will fortify Equinix's leading position in the cloud ecosystem.
Specifically, Equinix’s LD10 IBX facility in London and PA8 IBX facility in Paris have been sold to the JV. Part of the London facility has been re-named as LD13x xScale data center and will be used for hyperscale deployments, providing 10 megawatts (MW) of capacity for xScale customers. The balance of the facility has been leased back to Equinix, retaining the Equinix LD10 IBX name.
The Paris data center has been re-named the PA8x xScale data center. The final phase of the facility is anticipated to open in fourth-quarter 2019. At full buildout, the IBX data center will have a capacity of 14 MW.
Also, the Frankfurt data center’s initial phase is expected to open in third-quarter 2020, adding 10MW of capacity. At full builtout, it will likely support 18 MW capacity.
Notably, well-known hyperscale operators like Alibaba Cloud, Microsoft Azure, Amazon Web Services, Oracle Cloud Infrastructure and Google Cloud have partnered with Equinix owing to the company’s global platform of 200 IBX data centers. This vast network of data centers enables companies to directly connect to strategic business partners and customers.
Also, Platform Equinix offers most points of access to global cloud service providers. Moreover, hyperscale companies are ramping investments in large-scale data-center deployments to serve their rapidly-growing core workload needs. Hence, development of xScale data centers is a strategic fit as it will help hyperscale companies add core deployments at Equinix’s facilities to their existing access point locations. This will offer direct inter-connection to their customers and strategic business partners, as well as assist growth on a single Equinix platform, spanning more than 50 global metro cities.
Furthermore, over the past six months, shares of this Zacks Rank #3 (Hold) company have rallied 24.8%, outperforming the real estate market’s growth of 4.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, data-center REITs have been witnessing a boom, with growing popularity of cloud computing, Internet of Things and big data, the use of third-party IT infrastructure by several companies and the migration of IT infrastructure to the digital edge. Additionally, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. This will significantly propel growth of data-center REITs, such as Equinix, Digital Realty Trust (DLR - Free Report) , CyrusOne Inc. (CONE - Free Report) , CoreSite Realty Corp. (COR - Free Report) and others.
Amid these, accretive acquisitions and joint-venture efforts are expected to boost Equinix’s top-line growth.
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