What Hyperscaler Pullback? Data Center Players See Growth On Tap In 2025
‘Hyperscale customers’ activity is more likely to rhyme rather than repeat. Each customer typically beats to its own drum. So when some slow or pause, others push forward,’ says Digital Realty President and CEO Andy Power.
However, in the weeks since then Amazon Web Service has unveiled a $20 billion project in Pennsylvania; Google said it would expand its footprint in Jakarta, Indonesia; and CoreWeave just this month signed a 15-year deal with worth $7 billion for 250 megawatts of space in North Dakota.
Andy Power, president and CEO of data center heavyweight Digital Realty, told investors during the company’s April earnings call that the hyperscale business “beats to its own drum” and he doesn’t see a pullback from that investment.
“In our experience, hyperscale customers’ activity is more likely to rhyme rather than repeat. Each customer typically beats to its own drum. So when some slow or pause, others push forward,” Power said during the Austin, Texas-based company’s first-quarter earnings call. “Today we tend to be encouraged by the secular demand drivers of cloud, digital transformation and AI, which have been in place for the last several quarters.”
In fact, after the first three months of sales this year, four of the largest publicly traded data center providers upped their guidance for the rest of the fiscal year, telling investors demand remains strong and sales are coming in better than expected.
Adaire Fox-Martin, president and CEO of Redwood City Calif.-based Equinix, said the company continues to cultivate and win AI deals and has seen enterprise customers invest in targeted use cases amid a supply constrained market where there is more demand for data centers than supply.
“Our customers who represent a broad spectrum of industries told us they have made no significant adjustment to their digital infrastructure strategy beyond some pre-purchases of equipment,” Fox-Martin told investors during the company’s April 30 earnings call. “These customers are collectively signaling firm demand, which supports our operating plan despite the economic uncertainty.”
Boston-based American Tower—which bought CoreSite in 2021—said during its April 29 earnings call that all of the company’s demand signals are robust.
“People come to CoreSite because they need to be in an environment where they can interconnect to multiple players [and] have access to multiple cloud on-ramps, and we’re not seeing any flagging of demand for that today,” said American Tower President and CEO Steve Vondran. “In fact, what we’re seeing is that more and more enterprises want to take advantage of the multi-cloud environments so they can take advantage of some of the new tools. Some of it being AI. Some of it being traditional cloud tools that are there. What we’re seeing in that space is more demand.”
In a report earlier this year, Forrester Senior Analyst Alvin Nguyen wrote that data centers are viewed as long-term investments. While tariffs may hit the cost of material used in construction, this shouldn’t affect the near-term growth, he said. However, as more foundries are built around the world and that chip production leaves Taiwan, Nguyen said enterprises will weigh tariff impacts when considering where to build and buy data center space.
“Enterprises may be incentivized to time buildouts to where they see better returns, but this is where sovereignty laws [around AI and data] will also have an impact and can completely change the basis for where to build data centers,” he wrote. “For data centers, this has little effect in terms of if data centers will be built, but where they get built. Due to effectiveness of spend and any associated regulatory activity, [this] may be impacted.”
Here is a rundown of the most recent financial figures for five of the largest publicly traded data center operators and where they are charting growth in 2025.
Equinix
Quarterly Revenue: $2.25 billion
Annual Run Rate: $8.82 billion
Quarterly Net Income: $343 million
Fiscal Year Outlook: $9.17 billion to $9.27 billion, up to 6 percent growth
Equinix has upped its guidance after first-quarter results came in stronger than expected against a weaker U.S. dollar. The company added 300 new global customers compared with 240 new customers in the same quarter last year.
The data center and co-location provider projects significant revenue gains in the second quarter, in which it expects to report between $2.24 billion and $2.26 billion for 8.6 percent sequential growth on the high end.
Equinix’s Fox-Martin said the company has not seen an impact from tariffs and expects demand to remain strong through varying “economic cycles and policies.”
However, Fox-Martin said Equinix customers in consumer goods, transportation, energy and materials are concerned. Equinix said it fears that protracted uncertainty will prompt buyers to withhold spending.
Digital Realty
Quarterly Revenue: $1.4 billion
Annual Run Rate: $5.2 billion
Quarterly Net Income: $106 million
Fiscal Year Outlook: $5.82 billion to $5.92 billion, an up to 6.6 percent increase from $5.55 billion in 2024 actual revenue
Digital Realty’s sales dropped 2 percent in the first quarter but said demand remains high. The company increased annual guidance as Power said the pipeline remains robust among enterprise and hyperscale customers, even amid economic uncertainty.
“In our experience, hyperscale customers’ activity is more likely to rhyme rather than repeat. Each customer typically beats to its own drum. So when some slow or pause, others push forward,” Power said during the company’s April earnings call. “Today we tend to be encouraged by the secular demand drivers of cloud, digital transformation and AI, which have been in place for the last several quarters.”
Digital Realty has 5,000 customers inside its 300-plus data centers around the world and added 119 new customers last quarter.
American Tower-CoreSite
Quarterly Revenue: $2.56 billion
Annual Run Rate: $10.24 billion
Quarterly Net Income: $499 million
Fiscal Year Outlook: $10.04 billion for 1 percent year-over-year growth
The data center business American Tower acquired from CoreSite is growing in the high single digits to low double digits, according to Vondran, faster than the company’s first-quarter revenue growth of 2 percent on $2.56 billion in sales.
American Tower does not present separate financials for CoreSite.
The company also added 11 megawatts of electrical capacity and saw accelerated demand that Vondran said during the company’s first-quarter earnings call exceeded expectations.
“CoreSite’s performance continues to exceed our expectations, delivering a third consecutive year of record signed new leasing in 2024, which backstops our double-digit, top-line growth expectations and further supports elevated discretionary capital,” the company wrote in its annual report.
Iron Mountain
Quarterly Revenue: $ 1.6 billion
Annual Run Rate: $6.40 billion
Quarterly Net Income: $16 million
Fiscal Year Outlook: $6.74 billion to $6.89 billion, up 11 percent
Iron Mountain saw its highest single-quarter sales of $1.6 billion for 8 percent growth year over year. In that same time frame, the company’s data center business saw revenue growth of 24 percent.
Overall, Iron Mountain’s data center revenue is expected to come in around $800 million this year, or about 11 percent of the total $6.8 billion it is guiding to. Iron Mountain has more than 1,300 data center customers in 21 markets around the world. Based on the company’s backlog, it expects that segment to grow at approximately 20 percent going forward.
In addition, Iron Mountain has plans to triple its 424 megawatts of capacity with 185 megawatts under construction and another 671 planned.
Applied Digital
Quarterly Revenue: $52.9 million, up 16 percent
Annual Run Rate: $211.6 billion
Quarterly Net Income (loss): ($36.1 million)
Fiscal Year Outlook: Not provided
Applied Digital’s revenue was up and the company said it sees growth on the horizon. However, it is working to sell its cloud service provider business—which contributed $17.8 million in quarterly revenue—and convert its remaining business into a Real Estate Investment Trust model in the near future.
For the quarter ended Feb. 28, the company’s data center business was down 7 percent year over year with revenue of $35.2 million.
On June 2 Applied Digital and CoreWeave unveiled a 15-year lease agreement worth $7 billion. This follows the November announcement of investments with Macquarie Asset Management worth $5 billion and financing with Sumitomo Mitsui Banking Corporation worth $375 million.
Applied Digital has 286 megawatts of operating data center capacity at the moment between two facilities, and it expects the first phase of its three-phase Ellendale, N.D., data center to begin to contribute to revenue in October.
“We’re encouraged by the positive trends across our business and remain confident in our growth trajectory,” Chairman and CEO Wes Cummins said during the company’s most recent earnings call.