Stable Returns from Data Center REITs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 06 2026
0mins
Should l Buy DLR?
Source: NASDAQ.COM
- Growing Market Demand: As more companies scramble to upgrade their AI infrastructure, the demand for data center REITs is expected to soar in the coming years, positioning Digital Realty as a leading player to capitalize on this trend and ensure long-term growth potential.
- Profitability Improvement: Digital Realty's core funds from operations (FFO) per share are projected to rise by 9%-10% in 2025, reaching $7.32 to $7.38 per share, which comfortably covers its forward dividend of $4.88 per share, demonstrating its stable profitability and appeal.
- Leasing Model Advantage: As a triple-net-lease data center REIT, Digital Realty's tenants are responsible for maintenance, insurance, and property taxes, which reduces operational risks and allows the company to focus on core business growth while maintaining high dividend payouts.
- Attractive Valuation for Investors: With a current stock price of $165 and a price-to-earnings ratio of 22, Digital Realty presents a relatively reasonable valuation compared to higher-growth AI stocks, making it an appealing choice for conservative investors seeking stable dividends.
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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.
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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.
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- 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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- 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
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- 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
Nebius Signs Major AI Deal with Meta Platforms
- AI Infrastructure Partnership: Dutch company Nebius has signed a significant AI infrastructure deal worth up to $27 billion with Meta Platforms, ensuring Meta has sufficient computing power for its AI model development over the next five years, highlighting Meta's ambitions in the AI space.
- Market Validation: The contract's value exceeds Nebius's valuation from the previous day, solidifying its position as an emerging cloud service provider and demonstrating the viability of its business model, attracting more investor interest.
- Technological Investment: Meta will utilize Nvidia's latest Vera Rubin chips, expected to provide $12 billion worth of computing capacity starting in 2027, which not only enhances Meta's technological capabilities but also presents significant revenue growth potential for Nebius.
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