(Reuters) - Equinix (NASDAQ:EQIX) raised its annual adjusted core earnings forecast on Wednesday, betting on strong demand for its data center operation services amid growing adoption of generative artificial intelligence technology.
Demand for companies offering data center services has remained strong as more businesses look to incorporate generative AI into their products and transition their workloads to the cloud.
Generative AI processing needs high-power servers to train large language models and these servers are located in data centers with advanced cooling systems and infrastructure to maintain smooth operations.
Demand for such infrastructure has helped companies such as Equinix and Digital Realty (NYSE:DLR) Trust, which lease out their data centers to clients.
Equinix acquired three data centers in the Philippines last month, in a bid to expand its presence in the high growth potential region of Southeast Asia.
The company expects adjusted core earnings to be between $4.07 billion and $4.13 billion for fiscal year 2024, compared with its previous forecast of $4.04 billion to $4.12 billion. Analysts on average expect $4.10 billion, according to LSEG data.
Equinix also forecast third-quarter revenue in the range of $2.19 billion to $2.21 billion, while analysts estimate $2.21 billion.
The company's revenue stood at $2.16 billion during the second quarter, in line with analysts' estimate.
Adjusted core earnings were $1.04 billion for the three months ended June 30, up 4% over the previous quarter.
Adjusted funds from operations — a key measure of cash flow — came in at $9.22 per share, up 4% sequentially.