Equinix (EQIX 1.39%) has delivered remarkably steady growth. The data center operator has delivered 22 years of continuous revenue growth. It has capitalized on the ongoing digitalization of the economy, which is driving the need for more data centers to support and store all this digital information.

The digital transformation of bringing more business processes into the cloud is a long-term growth catalyst for the data center REIT. On top of that, the company sees the emergence of artificial intelligence (AI) as potentially adding fuel to that megatrend and driving more demand for data centers. AI-related infrastructure represents a potential $60 billion opportunity over the next few years.

A massive opportunity

Digital transformation is an enormous opportunity. According to an estimate by the World Economic Forum, digital transformation will create a more than $100 trillion economic opportunity over the next decade. That's leading companies to spend heavily on information technology to bring their businesses into the digital world:

A slide showing the digital infrastructure opporutnity.

Image source: Equinix.

As that slide showcases, companies will spend nearly $6 trillion through 2026 on information technology, according to an estimate by Gartner. That will drive the need for $665 billion of digital infrastructure, including $60 billion in AI-related infrastructure.

Equinix is working hard to capitalize on this enormous opportunity. The company has the current operations and capacity to service $140 billion of this total opportunity, including $21 billion of AI-related infrastructure. That's a massive opportunity for a company that should generate between $8.2 billion to $8.3 billion of revenue this year.

The unstoppable growth continues (with AI-powered upside potential)

Equinix estimates it can grow its revenue by around 8% to 10% per year as it continues to capture the overall digital infrastructure opportunity. That should drive its revenue up to around $12 billion by 2027. This revenue growth should support 7% to 10% annual adjusted funds from operations during that period. That earnings growth and a low dividend payout ratio of 43% power Equinix's view that it can grow its dividend (which yields 1.8%) at a more than 10% annual rate.

What's worth noting is that Equinix's outlook doesn't factor in AI-driven growth. At its recent Analyst Day, Equinx's management team stated that "it's still too early to forecast" whether we've reached an inflection point for AI-powered growth. While they're being conservative, AI adds tremendous upside potential to an already attractive growth rate powered by digital transformation-related data center investments. 

With upwards of $60 billion in AI-related infrastructure needed by 2026 (and the existing business capabilities already in place to service a quarter of this market), Equinix will undoubtedly capture some of the AI opportunity. It's already starting to see some AI-powered demand.

CEO Charles Meyers stated on the first-quarter earnings conference call: "We've closed several key AI wins over the past few quarters and are seeing a growing pipeline of new opportunities directly and with key partners for both training and inference use cases that benefit from the unique performance characteristics and multi-cloud proximity of our platform."

Equinix's leading global digital infrastructure platform gives it a competitive advantage to continue to capture more of this opportunity because it has the right infrastructure to meet AI specialized requirements:

A slide showing Equinix's AI advantages.

Image source: Equinix

The company's large-scale xScale data centers are ideally suited to support the data warehousing requirements of AI training programs. Meanwhile, its strategically located IBX facilities and network edge computing capabilities meet the proximity and latency (speed) requirements of AI interface applications.

Powerful growth with AI-driven upside potential

Equinix expects to deliver near double-digit annual revenue, adjusted FFO, and dividend growth through 2027, driven solely by the sizable digital transformation megatrend. That could support double-digital total annual returns for its investors during that timeframe.

However, that doesn't factor in any of the potentially massive AI infrastructure opportunity. The data center REIT is in an ideal position to capture a meaningful portion of that emerging market, given its leading global digital infrastructure platform. That adds tremendous upside potential, making Equinix an emerging AI growth stock that investors won't want to miss.