Company Reports

Digital Realty reported an excellent quarter, with exceptionally strong leasing renewal rates contributing to 29% revenue and 48% adjusted funds from operations growth. The firm continues to win artificial intelligence-enabled business in the over 1MW segment, prompting management to raise guidance.

Digital Realty is the second-largest third-party data center operator globally by revenue, with a focus on scale and a customer mix serving the largest enterprise tenants and hyperscalers. This large tenant customer mix provides two primary benefits. First, Digital Realty often loses tenants only to mergers or bankruptcies, resulting in an industry-low churn rate. Second, larger enterprises are more likely to rent meaningful additional capacity from Digital Realty than smaller tenants, building in a runway for growth.

Digital Realty is the second-largest third-party data center operator globally by revenue, with a focus on scale and a customer mix serving the largest enterprise tenants and hyperscalers. This large tenant customer mix provides two primary benefits. First, Digital Realty often loses tenants only to mergers or bankruptcies, resulting in an industry-low churn rate. Second, larger enterprises are more likely to rent meaningful additional capacity from Digital Realty than smaller tenants, building in a runway for growth.

Digital Realty's first-quarter results were strong, with revenue and adjusted EBITDA growing 16%. Management increased its revenue outlook for the year, but shares were mostly flat in after-hours trading, reflecting high investor expectations.

We are transferring coverage of Equinix and Digital Realty, the largest and second-largest third-party data center providers by revenue. The firms rent cloud-neutral data center capacity to hyperscalers and all sizes of enterprises, allowing tenants to connect to cloud providers and each other.

Digital Realty is the second-largest third-party data center operator globally by revenue, with a focus on scale and a customer mix serving the largest enterprise tenants and hyperscalers. This large tenant customer mix provides two primary benefits. First, Digital Realty often loses tenants only to mergers or bankruptcies, resulting in an industry-low churn rate. Second, larger enterprises are more likely to rent meaningful additional capacity from Digital Realty than smaller tenants, building in a runway for growth.

Digital Realty reported sturdy results, with operating revenue and adjusted EBITDA increasing 14%, driven by interconnectivity gains and re-leasing spread growth. The firm continues to tout its $1.4 billion rent backlog, with plans to commence over $1 billion in annualized rent in 2026.

Digital Realty reported strong third-quarter results, as the combination of prolific data center demand from hyperscalers and limited supply caused by power constraints has created an attractive pricing backdrop, leading to revenue and adjusted EBITDA growing 10% and 14%, respectively.

Digital Realty is shifting from a wholesale provider of data center space for the largest clients to a more diversified co-location business serving a wide range of customers. It offers space, power, and connectivity within its data centers. The move to attract more and smaller customers will help it benefit more directly from the growing cloud adoption and trends such as increasing data usage and expanding artificial intelligence workflows.

Digital Realty is shifting from a wholesale provider of data center space for the largest clients to a more diversified co-location business serving a wide range of customers. It offers space, power, and connectivity within its data centers. The move to attract more and smaller customers will help it benefit more directly from the growing cloud adoption and trends such as increasing data usage and expanding artificial intelligence workflows.

Digital Realty is transforming from a wholesale provider of data center space to a few very large customers into a more diversified co-location business offering space, power, and connectivity to many different customers. Its new identity will allow it to benefit from major secular trends such as increasing data usage and an increasing push toward cloud computing and artificial intelligence.

Digital Realty's data center revenue rose 11% and adjusted EBITDA grew 13%, driven by a record-setting $90 million in the zero to 1 megawatt-plus interconnection category. Management raised full-year revenue, adjusted EBITDA, and funds from operations guidance by a low-single-digit percentage.

Digital Realty is transforming from a wholesale provider of data center space to a few very large customers into a more diversified co-location business offering space, power, and connectivity to many different customers. Its new identity will allow it to benefit from major secular trends such as increasing data usage and an increasing push toward cloud computing and artificial intelligence.

Digital Realty is transforming from a wholesale provider of data center space to a few very large customers into a more diversified co-location business offering space, power, and connectivity to many different customers. Its new identity will allow it to benefit from major secular trends such as increasing data usage and an increasing push toward cloud computing and artificial intelligence.

Digital Realty's data center revenue grew 7% in the first quarter, driven by nearly 6% cash renewal spreads and over $240 million in annualized bookings. Digital's backlog of 814 megawatts under development and over $900 million of preleased signings will continue to drive revenue for the firm.

The data center and communications equipment stocks we cover traded down by midsingle digits while investors pushed tower stocks higher in response to the US tariff announcement April 2. We see little risk of material tariff-related headwinds for these businesses, and therefore we maintain our fair value estimates across our coverage.

Digital Realty is transforming from a wholesale provider of data center space to a few very large customers into a more diversified co-location business offering space, power, and connectivity to many different customers. Its new identity will allow it to benefit from major secular trends such as increasing data usage and an increasing push toward cloud computing and artificial intelligence.

Digital Realty’s fourth-quarter results may have taken a step down from last quarter’s ridiculous hyperscale activity, but we were still impressed with the firm’s ability to capture new enterprise-related spending, which along with the firm’s interconnection business, set records for new leasing activity in both the fourth quarter and full year. We continue to expect accelerating data center demand and maintain our $144 fair value estimate.

Digital Realty is transforming from a wholesale provider of data center space to a few very large customers into a more diversified co-location business offering space, power, and connectivity to many different customers. Its new identity will allow it to benefit from major secular trends such as increasing data usage and an increasing push toward cloud computing and artificial intelligence.

Digital Realty’s third-quarter results set records for numerous metrics, including new leasing volume, backlog, and releasing spreads as data center demand continues to accelerate amid artificial intelligence development and tight supply. We’ve raised our near-term outlook to account for new leasing activity and the firm’s near-term development pipeline, increasing our fair value estimate to $144 from $132.