Digital Realty Trust (DLR) Raises Guidance After Record Leasing and New Fund Launch—Is Sustained AI Demand Enough?

• Earlier in 2025, Digital Realty Trust announced record second-quarter results, highlighted by strong lease commencements and a raised full-year core Funds From Operations guidance, alongside launching a new US$3.0 billion hyperscale data center fund.
• The company’s sizeable US$919 million backlog in signed leases underscores continuing AI-driven demand, providing clear visibility into potential future growth despite some moderation in hyperscaler leasing activity.
• To assess the impact of these record lease commencements and guidance updates, we’ll examine how they shape Digital Realty Trust's investment outlook.

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Digital Realty Trust Investment Narrative Recap

To be a shareholder of Digital Realty Trust today, you need to believe in the lasting demand for digital infrastructure, particularly fueled by AI and cloud computing. The company’s record lease commencements and an expanded full-year FFO guidance reinforce steady revenue visibility from signed deals, though short-term results could still be influenced by shifting hyperscale leasing trends and ongoing competition; these latest results offer some reassurance, but competitive and capital market pressures remain material risks to monitor.

The launch of Digital Realty’s new US$3.0 billion hyperscale data center fund directly supports growth catalysts from heightened AI-related leasing, offering further capital to address client demand and maintain its edge in a rapidly growing market segment. This initiative aligns closely with the company’s investment in innovation partnerships and its efforts to expand capacity in key regions, reflecting both increased customer interest and the need to carefully manage future supply.

However, it is worth considering that while leasing momentum remains strong, potential volatility in capital costs and increased competition could challenge future earnings, especially if market conditions suddenly shift...

Read the full narrative on Digital Realty Trust (it's free!)

Digital Realty Trust's narrative projects $7.9 billion in revenue and $1.0 billion in earnings by 2028. This requires 11.5% yearly revenue growth and a $300 million decrease in earnings from the current level of $1.3 billion.

Uncover how Digital Realty Trust's forecasts yield a $199.19 fair value, a 25% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community fair value estimates for Digital Realty Trust span from US$110.45 to US$236.24, based on 3 unique viewpoints. This broad range highlights how capital market risk and competition concerns can shape confidence in the company’s future performance, encouraging you to explore a variety of perspectives before making any decisions.

Explore 3 other fair value estimates on Digital Realty Trust - why the stock might be worth 31% less than the current price!

Build Your Own Digital Realty Trust Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Digital Realty Trust research is our analysis highlighting 5 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Digital Realty Trust research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Digital Realty Trust's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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