American Tower’s AI-Infrastructure Play: Why the CoreSite-Nokia Pivot is a Hidden Growth Engine

The global AI revolution is rewriting the rules of infrastructure demand. As enterprises and hyperscalers race to deploy data-hungry models, the race for low-latency, high-capacity compute infrastructure has become a battleground. American Tower (AMT) is quietly emerging as a strategic winner through its CoreSite-Nokia partnership, a move that Wall Street has yet to fully price in. By leveraging Nokia’s FP5 silicon and next-gen routing solutions, CoreSite is transforming into a fortress for AI/ML workloads, creating a recurring revenue engine and a moat against hyperscaler competition. This is a buy now opportunity ahead of Q3 earnings, as the market underestimates the partnership’s scale and profitability.

The Technical Edge: FP5 Silicon and the AI-Infrastructure Sweet Spot

The partnership’s cornerstone is Nokia’s FP5 silicon, a fifth-generation network processor delivering 6 Tb/s forwarding capacity at 0.1 Watt per Gigabit flow—a 75% improvement in energy efficiency over prior generations. This is no incremental upgrade: FP5 enables CoreSite to handle 800GE/1.6T Ethernet speeds and support 400ZR/ZR+ coherent optics, making its data centers the ideal platform for AI/ML training and real-time inferencing.

Why does this matter?
- Low Latency, High Density: CoreSite’s facilities now support racks of up to 100 kW per rack, rivaling hyperscalers’ custom-built facilities. This is critical for AI workloads, which require dense compute and minimal latency between GPUs and storage.
- Flexible Scalability: Nokia’s modular design allows incremental upgrades, from 2.4 Tb/s to 19.2 Tb/s capacity per chassis, ensuring CoreSite can scale without costly reconfigurations.
- Security at Speed: Nokia’s ANYsec encryption and DDoS mitigation tools embed security into the network fabric, a must-have for enterprise AI applications handling sensitive data.

These technical advantages position CoreSite not just as a data center provider but as a mission-critical infrastructure partner for AI innovators.

The Wall Street Blind Spot: AFFO Growth is Being Underestimated

Analysts have AMT’s 2025 AFFO per share at $10.41, implying a nominal 1.3% decline from 2024. But this overlooks two critical factors:
1. Adjusted for Discontinued Operations: Excluding the ATC India sale (a one-time drag), AFFO growth jumps to 4.4%—a figure that doesn’t yet reflect the CoreSite-Nokia rollout’s full impact.
2. The Data Center Flywheel: CoreSite’s 9% revenue growth in 2024 and its 2025 $610M data center capex are primed to accelerate. The partnership’s 30-data center rollout across 11 U.S. markets—including key AI hubs like New York and Chicago—will boost tenant billings and margins.

TheStreet’s consensus is missing the recurring revenue tailwind. CoreSite’s 40,000+ interconnections are increasingly monetized via hybrid cloud and edge compute services, which command higher margins than traditional tower leases. With a cash-adjusted EBITDA margin of 68.2% in Q4 2024 (up 70 bps year-over-year), the partnership is already paying dividends.

The Moat Against Hyperscalers: Interconnection Dominance

Hyperscalers like AWS and Google are rushing to build AI-specific data centers, but they face a structural challenge: latency and cost inefficiency. CoreSite’s advantage lies in its existing interconnection ecosystem, which already connects 40,000 customers (including cloud providers, enterprises, and telecoms). Pair that with Nokia’s low-latency routing, and CoreSite becomes the neutral hub for hybrid AI workloads—think enterprise training models on-premises while tapping public cloud analytics.

This network effect is a moat Wall Street isn’t pricing in. Hyperscalers would need to replicate CoreSite’s interconnection density at massive cost, while AMT’s capex is already allocated. The result? A scalable, recurring revenue stream from enterprises seeking to avoid hyperscaler lock-in.

Why Q3 Earnings Could Be a Catalyst

Look for two metrics in Q3:
1. Data Center Utilization: CoreSite’s 11 MW of added capacity in 2024 should translate to higher tenant billings.
2. AFFO Margin Expansion: The FP5-powered infrastructure’s energy efficiency (25-43% savings with 800G optics) should ease margin pressure from FX headwinds.

Analysts currently project a $10.44 AFFO per share for 2025, but if CoreSite’s AI-driven growth outperforms, AMT could exceed expectations—a gap that’s ripe for a valuation re-rating.

Valuation: AMT is a Tower Stock Playing in a Data Center Game

AMT trades at a 13.5x 2025 P/FFO multiple, far below the 20+ multiple peers like Equinix command. This discount ignores CoreSite’s AI-infrastructure moat and its $210B 5G market tailwind (46.7% CAGR through 2029). The average price target of $244.53 (17% upside) is conservative; if the market catches up to CoreSite’s potential, AMT could see a 25-30% revaluation.

Final Call: Buy Now Ahead of the AI-Infrastructure Surge

The CoreSite-Nokia partnership isn’t just a data center upgrade—it’s a strategic pivot that turns AMT into a leader in the $27B AI infrastructure market. With 30 data centers now optimized for AI/ML, a 4.4% adjusted AFFO growth trajectory, and a moat that hyperscalers can’t easily breach, AMT is primed to outperform.

Action: Buy AMT ahead of Q3 earnings. The stock’s $208 price is a starting point for a multiyear play on the AI revolution—one that Wall Street still underestimates.

The AI era demands infrastructure that’s fast, dense, and interconnected. CoreSite has it. The question is: When will the market notice?