Data center boom drives growth in communication infrastructure companies but supply is catching up

LootboxPhobia · 2026-03-06T00:25:42+00:00

As the demand for data centers and internet infrastructure outpaces supply, Bernstein has begun covering multiple related companies, expecting global data center demand to grow at a compound annual rate of 13% by 2028. Analysts recommend Digital Realty and Equinix but are cautious about CoreWeave. The overall market vacancy rate is expected to decrease to 4.9% by 2026, then rise afterward.

LootboxPhobia

2026-03-06 00:25:42

Abstract generation in progress

Investing.com - The demand for data centers and internet infrastructure is outpacing supply, benefiting U.S. telecom infrastructure companies, but this imbalance may ease in the coming years.

Bernstein has initiated coverage on Digital Realty, Equinix, CoreWeave, and Crown Castle, amid a surge in spending related to artificial intelligence and cloud computing.

Use InvestingPro to track every rating and target price change

Analysts say that over $1 trillion has been committed to physical infrastructure development in the current cycle, including large-scale data center construction to support growing computing needs.

This demand growth is outpacing the pace of new capacity additions. Bernstein forecasts that global data center demand will expand at a 13% compound annual growth rate through 2028, maintaining high prices and low vacancy rates in the short term.

The firm expects the overall market vacancy rate to hit a low of about 4.9% in 2026, then rise above 10.5% by 2028 as new facilities come online.

Within this sector, Bernstein favors companies focused on enterprise clients rather than hyperscale cloud providers. The firm lists Digital Realty as a top pick, citing its stronger enterprise business growth as competitors prioritize hyperscale customer needs.

The broker also rates Equinix as a market outperform, believing its slower construction pace will strengthen its position in enterprise data centers when new projects come online.

Bernstein is more cautious on CoreWeave, giving it a market underperform rating. Analysts say the “new cloud” model faces risks, as hyperscale cloud providers may shift from partners to competitors, potentially limiting long-term growth.

The firm expects CoreWeave’s growth to slow significantly in 2027 and 2028, which could pressure cash flow and profit margins.

Bernstein has also initiated coverage of telecom tower operator Crown Castle, giving it a market outperform rating due to improved revenue prospects and confidence in the company’s transformation efforts.

This article was translated with the assistance of artificial intelligence. For more information, see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.