Bernstein Defines Top-Tier US Data Center Markets

Bernstein Identifies Key Data Center Market Tiers

Analysts at Bernstein have outlined a framework categorizing U.S. data center markets into three archetypes: Major Metro, Minor Metro, and Rural. The report highlights companies thriving in top-tier markets despite challenges like power delays and supply chain constraints.

Market Landscape Overview

Major Metro markets, the top 8 to 10 in the U.S., are crucial for latency-sensitive applications. These established areas face high build costs, with Northern Virginia's power queue extending to seven years and pricing at $217/KW/mo. Minor Metro markets serve as overflow for less latency-sensitive workloads, while Rural markets accommodate highly price-sensitive tasks with faster power availability.

Impact on Key Stocks

Public companies Digital Realty Trust (DLR) and Equinix (EQIX) are concentrated in Major and Minor Metro markets, insulating them from market volatility. Bernstein notes their strategy of building in high-growth areas like Atlanta, where pricing is $175/KW/mo, as favorable. The firm maintains Outperform ratings on both DLR and EQIX with respective price targets of $232 and $1,222.

Conclusion

The analysis suggests established builders like DLR and EQIX are best positioned to manage risks in high-demand Major Metro markets. Their experience provides a competitive advantage in navigating supply constraints and capitalizing on favorable market dynamics.

FAQ

Q: What are the three types of data center markets according to Bernstein?
A: The three types are Major Metro, Minor Metro, and Rural markets.

Q: Which companies are highlighted as leaders in top-tier markets?
A: Digital Realty Trust (DLR) and Equinix (EQIX) are identified for their strong positions in Major and Minor Metro markets.

Source: Investing.com