Elliott Now Eyeing Equinix
Datacenter real estate investment trust (REIT) market leader Equinix is the latest tech firm to land in the crosshairs of activist investor Elliott Management. And if history proves prescient, the datacenter firm could be in for a difficult reckoning.
Shares of Equinix rose about 1.5% on the news, but they are down 16% for the year. Elliott’s reported a minimum 0.2% stake in Equinix and it thinks returns should be better, particularly as Equinix leads in its market segment and has shown impressive growth.
Why Elliott Moves In
As the term implies, an activist investor takes control over enough of a company’s shares to exert compelling influence over management’s decision-making. And Elliott fits the profile. It typically moves in on companies that have substantial success in key markets—and that Elliott believes could do better.
In 2019, Elliott Management took a $1.3 billion stake in software giant SAP, leading to a restructuring and the eventual resignation of the CEO. In 2023, it took a sizeable stake in Salesforce, which avoided a proxy fight after results improved under pressure from Elliott. This year, Elliott, having taken a reported $1.5 billion stake in HPE, has arranged with HPE to take one or two board seats and launch a subcommittee to investigate strategic options for the firm. There’s a chance that unless he can turn things around, HPE CEO Antonio Neri may be ousted.
Issues to Watch at Equinix
Equinix shares have slumped in part due to apparent investor concern about its capital spending, which, though not in the range of the hyperscalers, has displeased some analysts. Originally, Equinix predicted $3.3 billion in capex for 2025, but after its first-quarter earnings report, that figure grew to between $3.4 billion and $3.7 billion.
Wall Street analysts are predicting an average of $9.23 billion in annual sales for Equinix this year, which means the company’s capex estimate could amount to 38% of its revenues. In comparison, Futuriom estimates that on average, capex for the leading cloud hyperscalers, including Amazon, Alphabet, Microsoft, Alibaba, and Meta, will be 22% of revenues in 2025.
Equinix has a “Build Bolder” strategy, which refers in part to undertaking AI datacenter projects worldwide. Management says the tack is a necessity. During an Analyst Day presentation in May, Equinix CEO Adaire Fox-Martin said:
“Build Bolder is about investing in our future growth, and we will do that whilst recognizing that there is a time lag between our investment and the realization of revenue and therefore returns."
Datacenter Details
Equinix’s buildout plans are ambitious. In October 2024, the company announced its will nearly triple its investment in building so-called xScale datacenters, which are designed, according to Equinix, to enable “hyperscale companies to add core deployments to their existing access point footprints at Equinix International Business Exchange (IBX) data centers.” Those IBX datacenters are key onramps to hyperscaler services, including AI services, for enterprises worldwide.
Equinix’s xScale plan is based on a joint venture with the Canada Pension Plan Investment Board (CPP Investments) and Singapore’s Government Investment Corporation (GIC). The partnership expects to raise $15 billion to buy sufficient land to open multiple 100-megawatt datacenters in the U.S., building to over 1.5 gigawatts of capacity on completion of the project.
Presently, Equinix has multiple datacenters in Europe and the Asia-Pacific region, also undertaken with joint venture arrangements. These include 10 in Europe and five in the APAC region. Indeed, according to Equinix, the company realizes 55% of its revenues in EMEA and APAC, and 45% in the Americas. Given growing demands of digital sovereignty, plus ongoing tariff pressures, the reliance on resources and revenue outside the U.S. could be an issue for Elliott’s examination.
Management: Always a Concern
Equinix could also be in for a re-evaluation of its leadership, if Elliott proves true to its past actions. While in the case of Salesforce, the activist investor maintained respect and support for CEO Marc Benioff, it hasn’t publicly given HPE CEO Antonio Neri the same assurances. Equinix CEO Adaire Fox-Martin is fairly new to the job, having been hired a little over a year ago.
There is other new management, which could factor in any focus by Elliott on U.S. investments. On July 17, Equinix announced that Arquelle Shaw, formerly the SVP, Sales, Americas, has been promoted to President, Americas, a post that will be crucial to the company’s growth in the U.S. Interestingly, the press release contains no quote from Fox-Martin but instead one from Jon Lin, Chief Business Officer at Equinix: “I am confident Arquelle will continue to advance our legacy of service and success in our largest and fastest-growing region.”
Asked about the Elliott investment, an Equinix spokesperson stated: “Equinix is focused on executing our strategy and driving value for shareholders. We regularly engage with our investors, including Elliott, to better understand their perspectives as we advance this goal.”
Futuriom Take: Equinix, the leading datacenter REIT, is in line for changes by activist investor Elliott Management. Equinix’s plans for buildouts in EMEA and APAC could come under the knife, along with management adjustments.
