During the second quarter, the data center sector outperformed with rest of the communications infrastructure market, as both CyrusOne and Equinix have experienced sharp growth, according to Barclays analyst Amir Rozwadowski.
Rozwadowski's report points toward Equinix's 17-percent rise and CyrusOne's 22-percent rise as well as the combination of hyperscale data center builds, rising cloud connectivity, and early stage but growing enterprise adoption for colocation as key drivers for the sector.
"The sector as a whole remains one of the few secular demand stories in the U.S. In our view, while industry trends are favorable, recent valuation trends suggest they are not wholly unanticipated," wrote Rozwadowski, adding that multiples are up for both CyrusOne and Equinix versus historical one- and three-year averages.
The praise for Equinix's performance in the data center sector comes as the firm recently sold off eight data center assets to Digital Realty for $874 million in order to gain approval from the European Commission for its tentative Telecity Group acquisition.
Equinix is poised to gain a much deeper presence in the European data center market after its Telecity acquisition, which could help boost its business dealings with U.S. clients that have facilities on the continent.
Through the deal, Equinix will gain seven new markets in Europe including Dublin, Helsinki, Istanbul, Manchester, Sofia, Stockholm and Warsaw.
Equinix's European expansion, coupled with its moves in the U.S., should position it well to take advantage of increased interest in private and hybrid cloud services. The company valued the hybrid cloud market alone at $60 billion and said its data center operations make it a viable player to grab share.
In the colocation market, Equinix was found by Synergy Research to be leading colocation revenue generation in eight of the top 15 global metro markets. CyrusOne was another notable colocation operation in those markets.
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