Data Centers

AI demand has permanently repriced colocation and hyperscale capacity.

Equinix reported new deal pricing up 12% year-over-year for the third consecutive quarter of acceleration, with management stating 'we are at the very early stage of durable pricing strength.' Digital Realty's hyperscale renewal rents on leases above 1 MW moved from $136 to $209 per kW, a 54% cash mark-to-market, while Iron Mountain's London-3 asset re-leased at 25-30% above its original rate. The repricing cycle is structural: shorter-duration retail contracts at Equinix and expiring hyperscale leases at DLR both create compounding mark-to-market tailwinds across multiple years.

Power, permitting, and community opposition now bind sector growth simultaneously.

Equinix management named power availability, legislation, and community sentiment as three distinct simultaneous headwinds, a more structured risk framing than any prior quarter. Iron Mountain disclosed that Texas, Ohio, and Georgia are implementing more restrictive data center development regulations, covering three of the largest U.S. hyperscale markets. Quanta Services explicitly ranked supply chain constraints above labor as the primary growth limiter for the first time, naming transformers, breakers, poles, and copper as the binding items, and disclosed that grid interconnection delays are affecting its own manufacturing facilities.

Hyperscaler capex commitments have reached a scale that redefines infrastructure supply chains.

Microsoft disclosed calendar-year 2026 capital expenditures of approximately $170 billion, the largest single-year infrastructure capital program disclosed by any public company in this cycle. Oracle's Q1 FY27 capital expenditures reached $28.5 billion, a 235% increase year-over-year, with management committing to elevated spend throughout fiscal 2027 and beyond. Meta reported nine-month 2026 capital expenditures of $83.06 billion and non-cancelable contractual commitments of $454.52 billion, with $167.26 billion due in 2026 and 2027 alone. At this scale, the constraint is no longer capital availability but the physical supply of transformers, fiber, cooling systems, and grid interconnection capacity.

Infrastructure suppliers are entering sustained multi-year earnings acceleration cycles.

Vertiv reported Q3 2026 net sales up 61% year-over-year with organic orders exceeding 100% growth across all regions, raising full-year 2026 net sales guidance to $14.7 billion. Eaton's data center orders grew 101% and sales grew 65% in Q3 2026, with the total electrical backlog exceeding $20 billion and rising 46% year-over-year. Quanta Services reached a record $64 billion backlog after a $10 billion sequential gain, raising full-year revenue guidance to $41.3-$41.6 billion. The convergence of record backlogs, raised guidance, and accelerating order growth across all three companies confirms that the infrastructure supply cycle is in an expansion phase, not approaching saturation.