Sarah: Equinix wants three billion in bonds — with five to seven billion a year in capex planned through 2029.
Sarah: You can already feel the gap.
Matt: This is The Data Center Daily.
Matt: Today — REITs raiding the bond market while NextEra quietly pencils in 8 gigawatts of new load.
Sarah: Plus, a Digital Realty rent number that says small leases are pricing very differently from bulk compute. First up — Equinix.
Sarah: Crypto Briefing writes:
Quote: Equinix wants $3 billion, and it’s going to the bond market to get it.
Quote: The global data center operator announced plans to raise at least $3B through a US investment-grade bond sale
Quote: a move that signals just how aggressively the company intends to build out infrastructure for the AI era.
Sarah: Equinix wants at least three billion from the investment-grade market.
Sarah: That money's earmarked for land, development, and AI-ready capacity.
Sarah: EQIX up 3.92% on the day — the market clearly read this as build-out, not bail-out.
Matt: And they lined up a new senior unsecured revolver alongside it.
Matt: Three billion in bonds, plus a fresh credit line.
Matt: They've got the pedal on the floor.
Sarah: The use-of-proceeds language is the tell for me.
Sarah: Property acquisitions, development, AI-ready expansion across 270-plus facilities in 76 markets.
Sarah: That capital's chasing the Cisco-NVIDIA “AI Factory” footprint they announced back in June.
Matt: “AI Factory” — NVIDIA's turnkey branding for space you rent instead of building.
Matt: Fine. But before I call that three billion well spent, I want to know how much contracted power actually shows up to energize those racks.
Sarah: Hanz Christensen, writing in Watch List News:
Quote: Equinix (NASDAQ:EQIX) raised its full-year and long-term outlook after reporting accelerating recurring-revenue growth
Quote: record interconnection additions and strong bookings in the second quarter
Quote: as the company said AI-related infrastructure demand is broadening across enterprise customers and service providers.
Sarah: We just covered the $3 billion bond raise.
Sarah: Now look at what it has to cover: 134 megawatts of xScale leases closed in Q2
Sarah: 700 megawatts under construction
Sarah: and capex guidance of five to seven billion a year through 2029.
Sarah: Do the arithmetic. Three billion in bonds barely covers the low end of a single year.
Matt: Right, so that three billion is a down payment.
Matt: And they're sitting on 3 gigawatts of land under control.
Matt: Land you don't own the power for is just an expensive field, Sarah.
Matt: Where's the contracted electricity to energize it?
Sarah: Honestly, look at the bookings.
Sarah: $424 million annualized, second-highest on record, 11% MRR growth — third straight double-digit quarter.
Sarah: The demand's real. But the balance sheet has to keep up, and that capex band points to a yearly trip back to the bond market.
Matt: And read the fine print — that 134 megawatts of xScale brought in about $120 million in non-recurring fees.
Matt: That fattens the EBITDA margin to 53%.
Matt: Strip the leasing fees out and the underlying margin's up 150 basis points, not 300.
Matt: Nice quarter. Just don't confuse the one-timer with the run rate.
Sarah: Fair. The record backlog is sold but not yet installed
Sarah: which means the interconnection line and the concrete both have to show up before that revenue does.
Sarah: TechStock2, with Iwona Majkowska:
Quote: The strongest indication for investors can be found beneath the main bookings figure.
Quote: Leases for smaller spaces along with interconnection accounted for $108.3 million in annualized rent
Quote: making up 52% of Digital Realty’s portion of newly signed agreements.
Sarah: Digital Realty's 10-Q Friday: small leases, from zero to one megawatt, cleared $280 a kilowatt.
Sarah: Big leases above one meg — $157.
Sarah: That's a 78 percent premium for the smaller footprint.
Sarah: And it's not a rounding error.
Sarah: Small-space plus interconnection came to $108 million, or 52 percent of newly signed annualized rent.
Sarah: The market's treating inference and bulk compute as two completely different products.
Matt: Wait — so the enterprise guys clearing 280 are subsidizing the hyperscalers at 157 per kilowatt?
Matt: The little tenant's carrying the pricing power here, not the gigawatt whale.
Matt: And in the Americas, the markup is 88 percent.
Matt: So when DLR walks back to the utility asking for load, remember who's actually paying the freight on that balance sheet.
Sarah: The stock took it well, too — down 5.3 on the week to $188.52.
Sarah: Andy Power's out crowing about topping a hundred million in sub-meg bookings for the first time; the tape shrugged.
Matt: Put it next to that Equinix bond raise we just hit — everybody's chasing the same scarce megawatt
Matt: but the money's coming from very different customers.
Sarah: The Motley Fool, with Jeff Siegel:
Quote: Management said it now has approximately 21 gigawatts of large-load interest at FPL, with 12 gigawatts already in advanced discussions.
Quote: A portion of those projects could begin taking service as early as 2028
Quote: and the company expects to announce at least one major large-load agreement before the end of this year.
Matt: NextEra bumped FPL's large-load forecast from 6 gigawatts to 8 by 2032 — a third higher.
Matt: Data centers are driving the increase.
Matt: And here's the part I actually like: they built a tariff to keep those hyperscaler costs off everybody else's bill.
Sarah: Twenty-one gigawatts of interest, twelve already in advanced discussions, with some taking service as early as 2028.
Sarah: Now put that next to Equinix: 700 megawatts under construction and 3 gigawatts of land under control.
Sarah: In one news cycle, demand is piling up on one side while supply strains on the other.
Sarah: By management's own math, every gigawatt means roughly two billion in new infrastructure.
Sarah: At eight gigawatts, you're talking sixteen billion in capital that has to get built and paid for.
Matt: Right. Dominion left cost-shifting to the customer's goodwill — a voluntary contribution.
Matt: FPL wrote the isolation straight into the rate design.
Matt: Dominion's hoping the hyperscaler chips in; FPL made it structural.
Sarah: They're also promising at least one major large-load agreement before year-end.
Sarah: Interest is 21 gigawatts.
Sarah: Signed is still zero.
Sarah: The utility's planning around that signal before a single yard of concrete gets poured.
Matt: Advanced discussions aren't take-or-pay.
Matt: Show me the contract with a penalty attached, and then I'll believe the eight.
Matt: Stargate keeps dropping site announcements and gigawatt projections.
Matt: So how do you stress-test those numbers?
Matt: What's the difference between a headline capacity figure and megawatts that can actually close financing and take power?
Sarah: The gap is substantial, and you can see it in a few specific documents.
Sarah: Take the Abilene flagship.
Sarah: Per reporting in “Wiring Capital to Compute,” the campus is visibly half-alive: some quadrants have operational substations
Sarah: while others are empty pads.
Sarah: Schedules are sliding right even as the supercomputer itself is running.
Sarah: That's the baseline signal.
Sarah: Announced capacity and energized capacity belong on different line items.
Sarah: I use four layers to separate them.
Sarah: Start with interconnection queue position and executed service agreements.
Sarah: Without a signed Large Generator Interconnection Agreement or Load Interconnection Service Agreement
Sarah: those megawatts are still just a plan on a land parcel.
Sarah: Then look for power contracts with actual commercial terms.
Sarah: The Michigan site is a good example.
Sarah: The Michigan PSC voted 3-0 in December to conditionally approve a 19-year, 1.4 gigawatt power supply agreement with DTE.
Sarah: Per Latitude Media's analysis, that's a financeable instrument.
Sarah: Next, equipment commitments.
Sarah: The “Wiring Capital to Compute” piece and the broader capex analysis in “12 Gigawatts Were Announced
Sarah: 4 Are Being Built” make the same point: the binding constraint sits two layers below the GPU.
Sarah: It's transformers, switchgear, and circuit breakers.
Sarah: Under 10% of the total cost is gating 100% of the schedule.
Sarah: Last, inspect the take-or-pay or offtake structure.
Sarah: A power contract that doesn't allocate curtailment risk and capacity payments to a creditworthy counterparty won't get project-finance
Sarah: treatment. On the grid side, Texas needs its own scorecard.
Sarah: Per reporting from April, Stargate's three Texas footprints are each handling the interconnection queue differently.
Sarah: One is grid hybrid, and another uses islanded gas.
Sarah: At the third, public disclosures still don't match the tracker data.
Sarah: That mismatch is itself a due-diligence flag.
Matt: On that islanded-gas approach in Texas — does going around the grid actually de-risk the project?
Matt: Or does it just swap interconnection risk for fuel-supply and permitting risk that's harder to model?
Sarah: It trades the interconnection queue for air permits and gas-supply contracts.
Sarah: Neither route is obviously easier, and the capital markets haven't fully repriced that swap yet.
Sarah: Here's what to watch: whether the Norway project and the five new U.S.
Sarah: sites produce executed power agreements with named counterparties and disclosed capacity terms
Sarah: or stay at the MOU and letter-of-intent stage.
Sarah: That's where the $500 billion promise meets the substation, and the substation is where the contract dies.
Host: If you follow the infrastructure powering AI
Host: check out AI Daily Briefing — top AI news for engineers
Host: founders and investors
Host: with real capabilities separated from demo hype every weekday.
Host: Find it wherever you listen to podcasts.
Host: We'll be watching Iron Mountain's results ahead of Wednesday's market open.
Host: That'll give us another read on data center REIT leasing and capital needs.
Host: And NextEra expects to announce at least one major large-load agreement before year-end.
Host: You'll find links to every story in today's show notes if you'd like to dig into any of them.
Host: That's The Data Center Daily for today.
Host: This is a Lantern Podcast.