Artificial intelligence (AI) has the potential to be a revolutionary technology. Bill Gates recently wrote, "The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone." He believes: "Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it."
AI needs many things to thrive. A big requirement is lots of data. Because of that, data centers will play a key role in the AI age. That bodes well for leading data center operator Equinix (EQIX -2.44%), which could become a powerhouse AI stock in the coming years.
The role of data centers in powering AI
Equinix laid out data centers' role in supporting AI in a white paper on the technology. The main thesis is that while AI model training and interfacing have historically occurred at a central data center, that will likely change. The company wrote:
Increasingly, AI will not just take place in a centralized manner in a private data center or in a public cloud. Instead, due to data compliance regulations, cost, and latency reasons, AI processing will happen in a distributed manner at both the core clouds and at various types of edge locations close to the end devices.
The company sees AI applications becoming more widely distributed and moving closer to the end-user or "edge" of the network. That suggests more AI applications will run in data centers on the edge, which are typically smaller and closer to end-users. It also implies that AI will need different types of processing technology depending on the AI application (training or interface) and how close it is to the device edge.
For example, large macro edge data centers (also known as hyperscale data centers) are ideal for hosting AI training hardware. These data centers aren't in every metro area and are less interconnected than other locations. Meanwhile, it sees smaller retail data centers closer to the edge playing an important role in supporting AI interface applications where processing high volumes of data with minimal delay (lower latency) is vital.
Built to power the AI world
Equinix is ideally suited to meet the needs of AI. It has a nearly unmatched global data center portfolio:
Image source: Equinix.
The company's large and growing data center portfolio positions it to meet the needs of AI applications as markets develop. It operates massive xScale data centers to empower AI training and smaller retail-oriented data centers that can meet the low latency needs of AI-powered interface applications at the edge.
Equinix also has a highly interconnected and secure network. That's vital for providing AI solutions with secure access to external data sets. AI solutions running at Equinix data centers can easily and quickly access the data needed to generate outputs.
Meanwhile, Equinix makes it easy for businesses to tap into the power of AI by offering end-to-end solutions. For example, it has partnered with Nvidia (NVDA 4.19%) and others on comprehensive AI solutions. In 2021, Nvidia revealed its AI LaunchPad program through a partnership with Equinix. It allows Equinix customers to develop advanced AI using technology designed by Nvidia. Equinix is also an early adopter of using liquid cooling technology developed by Nvidia. It reduces energy use at data centers and improves performance, which will help lessen the environmental impact of AI applications running at its data centers. These moves are helping position Equinix to play a crucial role in accelerating the rollout of AI technology.
Built to thrive in the AI age
AI crunches a lot of data to generate outcomes. As it becomes more mainstream, it will require more capacity at data centers, especially those closer to end-users. That bodes well for leading global data center operator Equinix. It operates a large-scale and growing data center portfolio, and is an early mover in testing the technology needed to support AI applications. Because of that, it could become a powerhouse stock in the coming AI age.
