Digital Realty: A New Investment Choice for Cloud and AI
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Should l Buy DLR?
Source: Fool
- Core Profit Growth: Digital Realty's core funds from operations (FFO) per share is projected to rise from $6.22 in 2020 to $7.32-$7.38 by 2025, reflecting a 9%-10% CAGR, which easily covers its forward dividend of $4.88 per share, demonstrating stable profitability and cash flow.
- Occupancy Rate Expectations: While maintaining occupancy rates in the mid-80s over the past five years, Digital Realty anticipates an increase of 100-200 basis points to 83.9%-84.9% by 2025, indicating sustained demand in the data center market and bolstering investor confidence.
- Attractive Dividend Yield: With a dividend yield of 2.9%, Digital Realty appears particularly appealing in the current interest rate environment, especially for conservative income-oriented investors, as its lower valuation offers a favorable alternative to higher-growth AI stocks.
- Rising Market Demand: As more companies scramble to upgrade their AI infrastructure, the demand for Digital Realty's AI-ready data centers is expected to soar in the coming years, driving long-term growth, even if its growth rate may not match that of Nvidia or Palantir.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy DLR?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on DLR
Wall Street analysts forecast DLR stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for DLR is 189.06 USD with a low forecast of 139.00 USD and a high forecast of 220.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
18 Analyst Rating
15 Buy
2 Hold
1 Sell
Strong Buy
Current: 164.650
Low
139.00
Averages
189.06
High
220.00
Current: 164.650
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.
Digital Realty Trust Reports Record Q4 2025 Earnings and Strong Growth Outlook
- Core FFO Growth: Digital Realty Trust reported a core FFO of $1.86 per share for Q4 2025 and $7.39 for the full year, marking a 10% increase over 2024, indicating robust performance and sustained profitability in the data center sector.
- Record Leasing Performance: The company signed over $1 billion in new leases for 2025, achieving a historic high, with zero to one megawatt interconnection bookings reaching $96 million in Q4, a 7% increase over the previous record, reflecting strong demand for data center capacity.
- Increased Capital Commitments: By the end of 2025, Digital Realty Trust secured over $3.2 billion in LP equity commitments for its inaugural closed-end fund, marking a successful entry into private markets and further supporting its growth strategy for hyperscale data centers.
- Optimistic Future Outlook: The company anticipates an 8% growth in core FFO per share for 2026, setting a guidance range of $7.90 to $8.00, reflecting confidence in the ongoing demand for cloud and AI services while planning to increase capital expenditures by $3.25 billion to $3.75 billion over the next two years.
See More
Digital Realty Trust: A Prime Investment in AI Data Centers
- Market Leadership: Digital Realty Trust operates over 300 data centers across 50 cities, serving more than 5,000 customers, establishing itself as the world's largest data center operator and highlighting its critical role in the rapidly growing AI data center sector.
- Revenue Structure Advantage: As a Real Estate Investment Trust (REIT), Digital Realty Trust distributes most of its profits as dividends to shareholders, avoiding corporate-level taxation, which allows investors to benefit more from the growth of the AI data center industry.
- Industry Growth Potential: According to Precedence Research, the AI data center industry is expected to grow at an average annual rate of over 27% through 2035, and Digital Realty Trust's structure positions it to capitalize on this growth trend, despite its third-quarter revenue growth being only 10%.
- Stable Dividend Yield: Although it has not raised its annual payout since 2022, Digital Realty Trust still offers a forward-looking dividend yield of nearly 3%, providing investors with a stable income source amid the surge in AI-driven demand.
See More
The AI Investment That Continues to Attract Investors
- Investor Trends: Investors are moving away from AI investments despite a significant market surge today.
- Data Center REITs: The only exception to this trend is the continued interest in data center real estate investment trusts (REITs).
See More
Amazon Plans $200 Billion Capital Expenditure in 2026 Amid Tech Sell-Off
- Amazon's Capital Expenditure Surge: Amazon plans to increase its capital expenditure to $200 billion in 2026, nearly matching its total revenue of $213 billion for Q4, leading to an over 8% drop in stock price during morning trading, indicating market concerns about its financial health.
- Accelerating AWS Growth: CEO Andy Jassy reported a 24% growth rate for AWS, the fastest in 13 quarters, with an annualized revenue of $142 billion; however, management anticipates Q1 operating income will fall short of analyst expectations, reflecting intensified market competition.
- Bitcoin Price Volatility: Bitcoin has dropped 50% from its 2025 peak, falling to around $60,000, which reflects waning confidence in government support for cryptocurrencies, although some analysts suggest this is merely a market correction rather than the end of crypto.
- Severe Market Reactions: Despite a 10% revenue increase in Q3, DOCS and PIDoximity saw their stock plunge over 30% due to declining net income under margin pressure, highlighting investors' acute sensitivity to profitability.
See More
DIGITAL REALTY TRUST INC: STIFEL LOWERS TARGET PRICE FROM $210 TO $200
- Price Adjustment: Stifel has reduced the target price for Digital Realty Trust Inc. from $210 to $200.
- Market Impact: This adjustment reflects changes in market conditions and expectations for the company's performance.
See More
Digital Realty (DLR) Q4 2025 Earnings Transcript
See More
Digital Realty Trust Reports Record Q4 2025 Earnings and Strong Growth Outlook
- Core FFO Growth: Digital Realty Trust reported a core FFO of $1.86 per share for Q4 2025 and $7.39 for the full year, marking a 10% increase over 2024, indicating robust performance and sustained profitability in the data center sector.
- Record Leasing Performance: The company signed over $1 billion in new leases for 2025, achieving a historic high, with zero to one megawatt interconnection bookings reaching $96 million in Q4, a 7% increase over the previous record, reflecting strong demand for data center capacity.
- Increased Capital Commitments: By the end of 2025, Digital Realty Trust secured over $3.2 billion in LP equity commitments for its inaugural closed-end fund, marking a successful entry into private markets and further supporting its growth strategy for hyperscale data centers.
- Optimistic Future Outlook: The company anticipates an 8% growth in core FFO per share for 2026, setting a guidance range of $7.90 to $8.00, reflecting confidence in the ongoing demand for cloud and AI services while planning to increase capital expenditures by $3.25 billion to $3.75 billion over the next two years.
See More
Digital Realty Trust: A Prime Investment in AI Data Centers
- Market Leadership: Digital Realty Trust operates over 300 data centers across 50 cities, serving more than 5,000 customers, establishing itself as the world's largest data center operator and highlighting its critical role in the rapidly growing AI data center sector.
- Revenue Structure Advantage: As a Real Estate Investment Trust (REIT), Digital Realty Trust distributes most of its profits as dividends to shareholders, avoiding corporate-level taxation, which allows investors to benefit more from the growth of the AI data center industry.
- Industry Growth Potential: According to Precedence Research, the AI data center industry is expected to grow at an average annual rate of over 27% through 2035, and Digital Realty Trust's structure positions it to capitalize on this growth trend, despite its third-quarter revenue growth being only 10%.
- Stable Dividend Yield: Although it has not raised its annual payout since 2022, Digital Realty Trust still offers a forward-looking dividend yield of nearly 3%, providing investors with a stable income source amid the surge in AI-driven demand.
See More
The AI Investment That Continues to Attract Investors
- Investor Trends: Investors are moving away from AI investments despite a significant market surge today.
- Data Center REITs: The only exception to this trend is the continued interest in data center real estate investment trusts (REITs).
See More
Amazon Plans $200 Billion Capital Expenditure in 2026 Amid Tech Sell-Off
- Amazon's Capital Expenditure Surge: Amazon plans to increase its capital expenditure to $200 billion in 2026, nearly matching its total revenue of $213 billion for Q4, leading to an over 8% drop in stock price during morning trading, indicating market concerns about its financial health.
- Accelerating AWS Growth: CEO Andy Jassy reported a 24% growth rate for AWS, the fastest in 13 quarters, with an annualized revenue of $142 billion; however, management anticipates Q1 operating income will fall short of analyst expectations, reflecting intensified market competition.
- Bitcoin Price Volatility: Bitcoin has dropped 50% from its 2025 peak, falling to around $60,000, which reflects waning confidence in government support for cryptocurrencies, although some analysts suggest this is merely a market correction rather than the end of crypto.
- Severe Market Reactions: Despite a 10% revenue increase in Q3, DOCS and PIDoximity saw their stock plunge over 30% due to declining net income under margin pressure, highlighting investors' acute sensitivity to profitability.
See More
DIGITAL REALTY TRUST INC: STIFEL LOWERS TARGET PRICE FROM $210 TO $200
- Price Adjustment: Stifel has reduced the target price for Digital Realty Trust Inc. from $210 to $200.
- Market Impact: This adjustment reflects changes in market conditions and expectations for the company's performance.
See More
Digital Realty (DLR) Q4 2025 Earnings Transcript
See More
