What happened

Shares in data center real estate investment trust (REIT) Equinix (NASDAQ:EQIX) bucked the broader market declines and soared 20.3% in the first half of 2020, according to data provided by S&P Global Market Intelligence. There haven't been many winners in the COVID-19 environment, but data centers are arguably one of them.

In a nutshell, the pandemic has helped accelerate an already strong trend toward the usage of video conferencing, remote working, and digitization in general. That's music to the ears of data centers responsible for storing and distributing data

The inside of a data center, with stacks of equipment.

Image source: Getty Images.

Indeed, during the company's first-quarter earnings call, CFO Keith Taylor noted, "we firmly believe our platform is not just relevant, but even more essential as the world we know quickly shifts to digital, only accelerated by the opportunities and the challenges created by COVID-19."

As such, Equinix's long-term prospects have probably received a boost due to the pandemic. Meanwhile, the company's near-term prospects appear to have only been minimally impacted by the pandemic. As you can see below, Equinix did reduce its full-year revenue and adjusted funds from operations (AFFO) guidance in the first quarter, but it was mainly due to unfavorable foreign exchange movements.

Equinix

Current Full-Year Guidance 

Foreign Exchange Impact

COVID-19 Impact

Acquisition/Integration Impact

Prior Full-Year Guidance

Revenue

$5,913 million

($105 million)

($25 million)

$36 million

$6,025 million

EBITDA

$2,805 million

($48 million)

($15 million)

($14 million)

$2,883 million

AFFO

$2,088 million

($35 million)

$0

($10 million)

$2,133 million

Data source: Equinix presentations. All figures are for the midpoint of guidance. 

So what

Equinix's guidance for AFFO per share between $23.62 and $24.66 implies the company's $10.64 dividend per share (current yield of 1.5%) is easily sustainable, and there's clearly potential for improvement and/or investment to grow the business. Indeed, Equinix has 32 construction projects under way intended to add capacity in 14 countries, and investors shouldn't overly focus on the dividend yield with this technology stock.

Now what

Investors will be hoping that the sales momentum established in the first quarter will feed through into more growth in the coming quarters. That will go a long way to convincing investors that the current strength is much more than just a "pull forward" of revenue due to the COVID-19 pandemic. Look out for management's commentary on the matter, in particular with regard to its pricing power in the second half.