DLR: Continued Demand for Data Centers Will Drive Expansion Momentum

Analysts have raised their price target for Digital Realty Trust by approximately $1.48. This reflects renewed optimism after recent guidance boosts and continued strong demand in data center markets.

Analyst Commentary

Recent analyst reports feature both bullish and cautious perspectives on Digital Realty Trust, reflecting careful consideration of the company's growth prospects and valuations.

• Bullish analysts have highlighted improved guidance and record demand pipelines, which signal strong momentum in core data center markets.
• Increases in price targets reflect confidence in Digital Realty's predictable growth business model.
• Analysts note the company’s valuation has become more attractive following sector consolidation, which makes it appealing for stable growth investors.
• Strong customer engagement and continued interest from key markets such as Charlotte support expectations for future leasing activity and expansion.

• Some analysts maintain a cautious outlook and keep Hold or Underweight ratings due to perceived downside risks.
• Cautious analysts cite slightly weaker leasing activity in recent results, suggesting potential challenges in capturing new deals as quickly as anticipated.
• Conservative viewpoints also point to adjustments in price targets that are more modest, which reflects ongoing scrutiny of the sector’s broader macro trends.

What's in the News

• Digital Realty announced an expanded collaboration with NVIDIA to advance next-generation AI infrastructure at its Manassas, Northern Virginia campus. This initiative includes support for NVIDIA's AI Factory Research Center and the development of best practices in AI data center design. (Client Announcements)
• The company raised its 2025 earnings guidance, increasing total revenue expectations to between $6.025 billion and $6.075 billion and net income per diluted share to between $3.57 and $3.62, up from previous projections. (Corporate Guidance, Raised)
• A strategic partnership with Dell Technologies and DXC was unveiled to deliver integrated private AI infrastructure solutions. Customers will benefit from validated use cases, comprehensive deployment toolkits, and expert-led services to accelerate AI adoption. (Client Announcements)
• Digital Realty introduced its data center innovation lab in Northern Virginia, providing partners and customers with a real-world environment to test AI and hybrid cloud deployments before full-scale implementation. The lab also fosters collaborative opportunities with industry leaders such as AMD, Cisco, Supermicro, and Vcinity. (Product-Related Announcements)

Valuation Changes

• The Fair Value Estimate has increased modestly from $197.70 to $199.19 per share, signaling a positive adjustment.
• The Discount Rate has risen slightly from 7.41% to 7.81%, reflecting a marginally higher risk assessment.
• The Revenue Growth projection edged down from 13.16% to 12.95%, indicating a minor reduction in forward growth expectations.
• The Net Profit Margin forecast decreased from 14.34% to 13.89%, suggesting a slightly lower profitability outlook.
• The Future P/E Ratio is projected to rise from 75.69x to 81.35x, highlighting an expectation for a higher market valuation multiple going forward.