Stable Returns from Data Center REITs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2d ago
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 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.
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- Data Center REITs: The only exception to this trend is the continued interest in data center real estate investment trusts (REITs).
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- 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.
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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 2025 Earnings Performance
- Record Financial Performance: Digital Realty Trust achieved a core FFO of $7.39 per share in 2025, marking a 10% increase over 2024, which underscores the company's robust growth momentum in the data center industry and solidifies its market leadership.
- Leasing Performance Breakthrough: The company signed over $1 billion in new leases in 2025, setting a historical record, while the 0 to 1 megawatt interconnection product category established a new quarterly leasing record in Q4, indicating sustained strong market demand.
- Strategic Expansion Initiatives: Digital Realty expanded into Indonesia and Malaysia in the Asia-Pacific region and successfully attracted over $3.2 billion in LP equity commitments, demonstrating its strong appeal in private markets and potential for future growth.
- Optimistic Future Outlook: The company projects core FFO guidance for 2026 to be between $7.90 and $8.00 per share, reflecting an 8% year-over-year growth, while anticipating total revenue and adjusted EBITDA growth of over 10%, indicating sustained strength in its business and balanced investment spending.
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
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 2025 Earnings Performance
- Record Financial Performance: Digital Realty Trust achieved a core FFO of $7.39 per share in 2025, marking a 10% increase over 2024, which underscores the company's robust growth momentum in the data center industry and solidifies its market leadership.
- Leasing Performance Breakthrough: The company signed over $1 billion in new leases in 2025, setting a historical record, while the 0 to 1 megawatt interconnection product category established a new quarterly leasing record in Q4, indicating sustained strong market demand.
- Strategic Expansion Initiatives: Digital Realty expanded into Indonesia and Malaysia in the Asia-Pacific region and successfully attracted over $3.2 billion in LP equity commitments, demonstrating its strong appeal in private markets and potential for future growth.
- Optimistic Future Outlook: The company projects core FFO guidance for 2026 to be between $7.90 and $8.00 per share, reflecting an 8% year-over-year growth, while anticipating total revenue and adjusted EBITDA growth of over 10%, indicating sustained strength in its business and balanced investment spending.
See More
