REITs Poised for Recovery as Fed Cuts Rates, 2025 AFFO Growth Expected
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 19 2026
0mins
Should l Buy DLR?
Source: Fool
- REIT Market Recovery: With the Fed cutting rates six times in a row in 2024 and 2025, the attractiveness of Real Estate Investment Trusts (REITs) is rising again, likely drawing in more income-driven investors and driving up valuations.
- Realty Income's Strong Performance: Realty Income, owning over 15,500 commercial properties, reported a 98.7% occupancy rate in the latest quarter and expects its adjusted funds from operations (AFFO) to grow 1%-2% to $4.25-$4.27 per share in 2025, ensuring its $3.22 per share dividend payment.
- Vici Properties' Rent Growth: Vici Properties has maintained a 100% occupancy rate since its 2018 IPO and expects its AFFO per share to rise 4%-5% to $2.36-$2.37 in 2025, supporting its $1.80 per share dividend, showcasing strong resilience against economic headwinds.
- Digital Realty's Recovery Outlook: Despite a decline in AFFO over the past four years, Digital Realty anticipates an 8%-9% growth in core FFO to $7.25-$7.30 per share in 2025, with occupancy rates expected to rise to 84.9%-85.9%, securing its $4.88 per share dividend.
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Analyst Views on DLR
Wall Street analysts forecast DLR stock price to rise
18 Analyst Rating
15 Buy
2 Hold
1 Sell
Strong Buy
Current: 180.450
Low
139.00
Averages
189.06
High
220.00
Current: 180.450
Low
139.00
Averages
189.06
High
220.00
About DLR
Digital Realty Trust, Inc. is a real estate investment trust. The Company owns, acquires, develops, and operates data centers through its operating partnership subsidiary, Digital Realty Trust, L.P. The Company is focused on providing data center, colocation, and interconnection solutions for domestic and international customers across a variety of industry verticals ranging from cloud and information technology services, communications and social networking to financial services, manufacturing, energy, healthcare, and consumer products. Its portfolio consists of over 308 data centers, of which 121 are located in the United States, 112 are located in Europe, 36 are located in Latin America, 16 are located in Africa, 16 are located in Asia, six are located in Australia and three are located in Canada. Its PlatformDIGITAL is a global data center platform for scaling digital business which enables customers to deploy their critical infrastructure with a global data center provider.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Analysis of Current AI Stock Market Trends
- Importance of Profitability: As the market increasingly focuses on profitability, Palantir reported a net income of $1.6 billion against a market cap of $330 billion, and despite expected per-share profit growth of over 70%, it failed to meet investor expectations, resulting in a more than 30% decline from its peak.
- Strong Data Center Performance: Digital Realty achieved a 10% revenue increase in 2025 and nearly 40% growth in operating profit, demonstrating solid profitability in the AI data center sector, which has helped its stock maintain a long-term upward trend despite volatility.
- Cautious Market for AI Solutions: While emerging technologies like AI assistants are gaining attention, a survey indicates that 56% of CEOs have yet to see financial benefits from AI investments, reflecting a growing demand for sustainable value in the market.
- Challenges of Power Efficiency: The International Energy Agency projects that data center electricity consumption will grow by 15% annually, significantly outpacing overall energy usage growth, prompting the industry to shift towards more efficient 800-volt DC systems to address rising operational costs.
See More
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- Nvidia's Market Outlook: Nvidia anticipates that the AI infrastructure opportunity could reach $4 trillion over the next five years, positioning itself to capture a significant market share through its Blackwell and Vera Rubin processors, despite a loss of $840 billion in market capitalization.
- Digital Realty's Growth Potential: Digital Realty operates over 300 data centers and currently has 3 GW of data center capacity, with a projected $1.2 billion in full-year bookings for 2025, indicating strong demand in cloud computing and data services.
- Credo Technology's Rapid Growth: Credo Technology reported a 201.5% year-over-year revenue increase to $407 million in Q3 of fiscal 2026, with current quarter revenue expected between $425 million and $435 million, showcasing its strong performance in high-performance computing and data center connectivity products.
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- Digital Realty Performance: Digital Realty achieved $1.2 billion in bookings for 2025 and has a backlog of $1.4 billion, indicating strong demand and a solid position in the data center services market.
- Credo Technology Growth: Credo Technology's revenue tripled year-over-year to $407 million in the latest quarter, reflecting rapid expansion in high-performance computing and data center connectivity products, with forecasts for the next quarter between $425 million and $435 million.
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- Wider-than-Expected Losses: Fermi reported losses that exceeded market expectations in its latest earnings release, leading to a 13.27% drop in stock price to $5.36 on Monday, reflecting investor concerns about the company's financial health.
- Slow Tenant Progress: Despite ongoing construction of its flagship AI project, Project Matador in Texas, Fermi has not announced any new tenants, indicating challenges in securing long-term customers and potentially extending the timeline for revenue realization.
- Surge in Trading Volume: On Monday, Fermi's trading volume reached 45.7 million shares, approximately 480% above its three-month average of 7.9 million shares, indicating heightened market attention to its stock price volatility.
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See More
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- Wider-Than-Expected Losses: Fermi reported inaugural losses that exceeded market expectations, leading to a 13.27% drop in stock price to $5.36, highlighting challenges in attracting long-term customers.
- Surge in Trading Volume: Trading volume surged to 45.7 million shares, approximately 480% above the three-month average, reflecting heightened market concern and interest in Fermi's future developments.
- Slow Project Progress: While construction on the flagship Project Matador in Texas is ongoing, the lack of new tenant announcements has extended the revenue timeline, increasing uncertainty among investors.
- Lackluster Market Response: Compared to Fermi, peers Equinix and Digital Realty Trust showed muted stock movements, indicating a broader lack of confidence in data center REITs, with Fermi's stock plummeting 84% since its IPO.
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- Technological Investment: Nebius will provide Meta with $12 billion worth of computing capacity using Nvidia's latest Vera Rubin chips, a technological choice that will significantly enhance Meta's competitiveness in the AI space, ensuring it stays ahead in technological advancements.
- Strategic Expansion: This agreement not only deepens the collaboration between Nebius and Meta but also complements other significant investments from Nvidia and Microsoft, further solidifying Nebius's critical role in the global AI infrastructure market.
See More
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- Importance of Profitability: As the market increasingly focuses on profitability, Palantir reported a net income of $1.6 billion against a market cap of $330 billion, and despite expected per-share profit growth of over 70%, it failed to meet investor expectations, resulting in a more than 30% decline from its peak.
- Strong Data Center Performance: Digital Realty achieved a 10% revenue increase in 2025 and nearly 40% growth in operating profit, demonstrating solid profitability in the AI data center sector, which has helped its stock maintain a long-term upward trend despite volatility.
- Cautious Market for AI Solutions: While emerging technologies like AI assistants are gaining attention, a survey indicates that 56% of CEOs have yet to see financial benefits from AI investments, reflecting a growing demand for sustainable value in the market.
- Challenges of Power Efficiency: The International Energy Agency projects that data center electricity consumption will grow by 15% annually, significantly outpacing overall energy usage growth, prompting the industry to shift towards more efficient 800-volt DC systems to address rising operational costs.
See More
Tech Giants to Spend $700 Billion on AI Infrastructure
- Massive Investment Scale: Meta, Alphabet, Amazon, and Microsoft are expected to collectively invest $700 billion in AI infrastructure in 2023, a figure that exceeds the GDP of many countries, highlighting the tech industry's commitment to AI.
- Nvidia's Market Outlook: Nvidia anticipates that the AI infrastructure opportunity could reach $4 trillion over the next five years, positioning itself to capture a significant market share through its Blackwell and Vera Rubin processors, despite a loss of $840 billion in market capitalization.
- Digital Realty's Growth Potential: Digital Realty operates over 300 data centers and currently has 3 GW of data center capacity, with a projected $1.2 billion in full-year bookings for 2025, indicating strong demand in cloud computing and data services.
- Credo Technology's Rapid Growth: Credo Technology reported a 201.5% year-over-year revenue increase to $407 million in Q3 of fiscal 2026, with current quarter revenue expected between $425 million and $435 million, showcasing its strong performance in high-performance computing and data center connectivity products.
See More
Nvidia Positioned for AI Infrastructure Spending Surge
- AI Infrastructure Investment: Nvidia is poised to capture a significant share of the up to $4 trillion AI infrastructure opportunity over the next five years, particularly through its Blackwell and Vera Rubin processors, solidifying its market leadership.
- Digital Realty Performance: Digital Realty achieved $1.2 billion in bookings for 2025 and has a backlog of $1.4 billion, indicating strong demand and a solid position in the data center services market.
- Credo Technology Growth: Credo Technology's revenue tripled year-over-year to $407 million in the latest quarter, reflecting rapid expansion in high-performance computing and data center connectivity products, with forecasts for the next quarter between $425 million and $435 million.
- Market Dynamics Analysis: Despite recent pressures on tech stocks, Nvidia's shares are considered attractive, currently trading over 16% below their all-time high with a forward P/E ratio of about 21, presenting a potential buying opportunity for investors.
See More
Fermi Shares Plunge 13.27% Amid Earnings Concerns
- Wider-than-Expected Losses: Fermi reported losses that exceeded market expectations in its latest earnings release, leading to a 13.27% drop in stock price to $5.36 on Monday, reflecting investor concerns about the company's financial health.
- Slow Tenant Progress: Despite ongoing construction of its flagship AI project, Project Matador in Texas, Fermi has not announced any new tenants, indicating challenges in securing long-term customers and potentially extending the timeline for revenue realization.
- Surge in Trading Volume: On Monday, Fermi's trading volume reached 45.7 million shares, approximately 480% above its three-month average of 7.9 million shares, indicating heightened market attention to its stock price volatility.
- Industry Comparison: Within the data center REIT sector, Fermi's stock movements were significantly more pronounced than peers Equinix and Digital Realty Trust, which saw minor fluctuations of +0.11% and -0.13%, respectively, highlighting the unique challenges faced by Fermi.
See More
Fermi Shares Plunge 13.27% Amid Tenant Concerns
- Wider-Than-Expected Losses: Fermi reported inaugural losses that exceeded market expectations, leading to a 13.27% drop in stock price to $5.36, highlighting challenges in attracting long-term customers.
- Surge in Trading Volume: Trading volume surged to 45.7 million shares, approximately 480% above the three-month average, reflecting heightened market concern and interest in Fermi's future developments.
- Slow Project Progress: While construction on the flagship Project Matador in Texas is ongoing, the lack of new tenant announcements has extended the revenue timeline, increasing uncertainty among investors.
- Lackluster Market Response: Compared to Fermi, peers Equinix and Digital Realty Trust showed muted stock movements, indicating a broader lack of confidence in data center REITs, with Fermi's stock plummeting 84% since its IPO.
See More
Nebius Signs $27 Billion AI Deal with Meta Platforms
- Major Partnership Agreement: Nebius has signed a $27 billion AI infrastructure deal with Meta Platforms, ensuring that Meta secures sufficient computing power over the next five years to support its AI model development, showcasing Nebius's strong competitive position in the AI cloud computing sector.
- Market Validation: The deal's value exceeds Nebius's previous company valuation, marking a significant recognition of its status as an emerging cloud provider and proving the viability of its business model, which attracts increased investor interest.
- Technological Investment: Nebius will provide Meta with $12 billion worth of computing capacity using Nvidia's latest Vera Rubin chips, a technological choice that will significantly enhance Meta's competitiveness in the AI space, ensuring it stays ahead in technological advancements.
- Strategic Expansion: This agreement not only deepens the collaboration between Nebius and Meta but also complements other significant investments from Nvidia and Microsoft, further solidifying Nebius's critical role in the global AI infrastructure market.
See More
