There's no denying that computing technology powerhouse Nvidia and all of its hardware peers led the way during the earliest part of the artificial intelligence (AI) revolution. As the business matures, however, it's also changing.
It's not just new leaders emerging, either. New kinds of leaders are emerging as well. Physical hardware isn't inspiring investors like it used to. AI data centers are the hot opportunity now, but they're a whole different kind of business and might best serve investors with a whole different kind of business model and business structure.
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To this end, investors on the hunt for their next must-have AI trade might want to consider a stake in real estate investment trust Equinix(NASDAQ: EQIX) following its recent full-year revenue guidance of more than $10 billion, up 10% from last year's top line. While this growth pace isn't exactly heroic, it's apt to be sustainable for a long, long time.
Not the usual structure for the industry, but arguably the right one
With just a passing look, there's nothing especially special about Equinix. It operates 280 different data centers all across the world, supplying a cloud-accessible, AI-capable platform to over 300 Fortune 500 customers, including video game developer Square Enix Holdings, Siemens, and business communications technology provider Zoom Communications, just to name a few. It did a little over $9.2 billion worth of business in 2025, turning just under $2 billion of that into operating income. But it's not like other outfits aren't in the same business, offering a service of comparable quality.
Where Equinix shines more than most others in the same space is that it isn't trying to escape the obvious nature of the third-party data center business. That's the fact that -- as opposed to its customers paying a hefty up-front cost to build their own data center that may end up not being fully utilized -- Equinix's is a recurring revenue business built on renting access to its platforms. It's better to embrace and make the most of everything this model is (and isn't) than to fight it.
And this company has done exactly that. Rather than aiming for massive long-term growth at any and all costs, Equinix has built a cash cow that supports solid, reliable dividend payments that are rarely seen from stocks in the technology sector. Of last year's effective cleared cash flow of $38.33 per share, $18.76 of that was passed along in the form of dividends, translating into a trailing yield of right around 2%. That's not bad, particularly given the dividend payment's 10% announced earlier this year, in step with its expected revenue and earnings growth.
Image source: Getty Images.
Then there's the nuance that's not readily evident to interested investors but is important all the same.
As was noted, Equinix is organized as a real estate investment trust, or REIT, for short. That just means that as long as the bulk of any of its net profits are passed along to shareholders in the form of dividends, they're not first taxed at the corporate level. This ultimately means shareholders are provided with more net value than they would be if it were structured as a conventional company, even though this ticker trades just like any other corporation's.
Buy it, or no?
But the question remains ... is Equinix a buy for 2026?
It depends on whether or not you want invest in a quality name within the artificial intelligence data center industry. It also depends (albeit only slightly) on whether you're going to make this investment in a taxable account where this REIT's dividends will generate taxable income. Although you never really avoid taxes, perhaps you'd prefer to at least postpone them.
For most investors, though -- and particularly investors who want to dial back some of their risk in the current, unpredictable market environment -- Equinix is poised to sustain its steady revenue and dividend growth simply because most AI data center customers are likely to continue paying for access to this REIT's tech. They're largely committed to it, in fact. This reliability is always marketable but could prove incredibly valuable should the market run into some more serious turbulence that threatens most growth companies' bottom lines.
Data source: Morningstar. Chart by author.
But you don't need income right now? You'd rather have the growth instead? That's OK. You'll still get the capital appreciation stemming from the ongoing expansion of its business. You'll just also get some of this upside in the form of dividends and dividend growth. This stock's recent dividend increase is likely to mark its approximate growth pace for many years to come.
This might help convince you: Despite the stock's recent run-up from November's 52-week low, 23 of the 30 analysts covering this stock still consider Equinix stock a strong buy, with a consensus target of $1,031.08 that's almost 10% above the ticker's present price at the time of this writing. That's certainly not the worst way to start out a new trade.
Should you buy stock in Equinix right now?
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equinix, Nvidia, and Zoom Communications. The Motley Fool has a disclosure policy.
