Equinix forecasts quarterly, annual revenue below estimates as strong dollar weighs

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(Reuters) – Equinix forecast first-quarter and annual revenue below estimates on Wednesday, hurt by a strong dollar amid rising concerns about hefty spending on data center expansion as businesses double down on generative AI adoption. 

Shares of the company fell more than 2% in extended trading.

Massive spending on AI and infrastructure investments has come under scrutiny this year after the launch of China’s DeepSeek, which claimed to have developed AI models at a fraction of the cost compared to U.S. tech leaders OpenAI and Alphabet’s Google.

Equinix expects first-quarter revenue to be between $2.19 billion and $2.23 billion, below analysts’ average estimate of $2.29 billion, according to data compiled by LSEG.

The forecast includes $25 million of higher seasonal costs and a $20 million negative foreign currency impact, when compared to the average exchange rates in the fourth quarter of 2024, the company said.

The company expects 2025 revenue to be between $9.03 billion and $9.13 billion, including a $252 million negative foreign currency impact when compared to the prior rates. Analysts estimated $9.40 billion.

Equinix has a significant presence in Asia and Europe, making it susceptible to changes in foreign exchange rates. 

A strong dollar could hurt fourth-quarter revenue by as much as $31.5 million, TD Cowen analysts said in a note earlier in February. 

In the three months ended December 31, Equinix’s revenue stood at $2.26 billion. Analysts expected $2.97 billion.

Adjusted funds from operations, a key measure of cash flow, came in at $7.92 per share in the fourth quarter, missing estimates of $7.95 per share.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Alan Barona)