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Digital Realty (DLR)
NYSE:DLR
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Digital Realty (DLR) AI Stock Analysis

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DLR

Digital Realty

(NYSE:DLR)

Rating:71Outperform
Price Target:
$188.00
▲(15.17% Upside)
Digital Realty's overall stock score reflects its strong financial performance and positive earnings call, which are the most significant factors. While the technical analysis suggests a neutral trend, the valuation indicates potential overvaluation. Corporate events further support the company's strategic growth and operational flexibility.
Positive Factors
Demand and Leasing
Digital Realty Trust management highlighted a record demand pipeline and reiterated the potential for future record leasing, which is viewed positively.
Global Expansion
Digital Realty has been enhancing its global footprint via strategic mergers and acquisitions over the years.
Industry Positioning
DLR is clearly a leader in its industry, and is expected to benefit from industry growth as well as consolidation.
Negative Factors
Customer In-sourcing
Hyperscale cloud providers, the largest existing tenants of data centres, may opt to move all or significant data centre servers in-house.
Foreign Exchange Risk
Around 45% of Digital Realty's revenue is contributed by markets with foreign exchange rate risk.
Valuation Concerns
Despite the attractive market demand setup, the valuation is considered rich given growth relative to expectations.

Digital Realty (DLR) vs. SPDR S&P 500 ETF (SPY)

Digital Realty Business Overview & Revenue Model

Company DescriptionDigital Realty supports the world's leading enterprises and service providers by delivering the full spectrum of data center, colocation and interconnection solutions. PlatformDIGITALR, the company's global data center platform, provides customers a trusted foundation and proven Pervasive Datacenter Architecture PDxTM solution methodology for scaling digital business and efficiently managing data gravity challenges. Digital Realty's global data center footprint gives customers access to the connected communities that matter to them with more than 284 facilities in 48 metros across 23 countries on six continents.
How the Company Makes MoneyDigital Realty generates revenue primarily through leasing data center space to customers, which includes colocation and interconnection services. The company operates on a long-term lease model, typically securing multi-year contracts with its clients, which provides stable and predictable cash flows. Key revenue streams include monthly rental income from colocation services, as well as fees for interconnection services that allow clients to connect their infrastructure with other networks and service providers. Significant partnerships with major cloud service providers and telecommunications companies also contribute to its earnings, as these relationships drive demand for Digital Realty's data center solutions. Additionally, the company benefits from a growing market for data storage and processing, driven by increasing data consumption and digital transformation trends across various sectors.

Digital Realty Earnings Call Summary

Earnings Call Date:Jul 24, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
Digital Realty's earnings call highlighted significant achievements in bookings, financial growth, and sustainability efforts. Despite some challenges in refinancing and geographical disparities in AI demand, the company's strong financial position and strategic initiatives indicate a positive outlook.
Q2-2025 Updates
Positive Updates
Record-Breaking Bookings
Digital Realty posted $177 million of new bookings in the quarter at 100% share, including $135 million of Digital Realty share. The 0-1 megawatt plus interconnection product set reached $90 million of bookings, marking a record performance.
Core FFO Growth
Core FFO surged to a record $1.87 per share, a 13% increase over last year's results and 6% higher than the previous quarter.
Strong Financial Position
The company reported more than $7 billion of liquidity, below target leverage, and increased its guidance for revenue, adjusted EBITDA, and core FFO per share for the full year 2025.
Sustainability Achievements
Digital Realty expanded its renewable energy supplies with 185 data centers matched with 100% renewable energy and achieved a 14% year-over-year reduction in water usage intensity in its North American colocation portfolio.
U.S. Hyperscale Data Center Fund Success
The company received more than $3 billion of LP equity commitments for its U.S. Hyperscale Data Center Fund, surpassing its target raise and original schedule.
Negative Updates
Refinancing Headwinds
Digital Realty faces a 325-basis point refinancing headwind beginning in the third quarter due to maturing eurobonds.
Geographical Disparity in AI Demand
Demand for AI deployments in EMEA and APAC is growing but still lags behind the U.S., which might limit immediate global expansion opportunities.
Potential Lower Future Re-Leasing Spreads
Re-leasing spreads may decrease from current high levels due to reduced contribution from certain categories that performed strongly in the first half of the year.
Company Guidance
During Digital Realty's Second Quarter 2025 earnings call, the company reported strong financial performance and raised its guidance for the year. Key highlights included $177 million in new bookings, with $135 million attributed to Digital Realty, and a record $90 million in bookings from their 0-1 megawatt plus interconnection product set. This success contributed to a surge in core funds from operations (FFO) to $1.87 per share, marking a 13% year-over-year increase. Additionally, Digital Realty's liquidity exceeded $7 billion, and the company maintained below-target leverage. The call also highlighted progress in their U.S. Hyperscale Data Center Fund, which received over $3 billion in LP equity commitments, extending Digital Realty's growth runway. Looking forward, the company increased its full-year revenue and adjusted EBITDA guidance by $100 million and $75 million, respectively, supported by a robust backlog of $826 million and strong demand for data center capacity driven by digital transformation, cloud adoption, and AI trends.

Digital Realty Financial Statement Overview

Summary
Digital Realty demonstrates strong financial health with consistent revenue growth, robust profitability, and effective cash flow management. The balance sheet is stable, though there is potential to enhance equity returns.
Income Statement
75
Positive
Digital Realty shows a steady revenue growth rate of 2.42% TTM, with a strong net profit margin of 23.98% and an EBIT margin of 16.09%. However, the gross profit margin has decreased from previous years, indicating potential cost pressures. Overall, the company demonstrates solid profitability and growth in the TTM period.
Balance Sheet
70
Positive
The company maintains a moderate debt-to-equity ratio of 0.86, reflecting a balanced approach to leverage. Return on equity is modest at 6.37%, suggesting efficient use of equity capital. The equity ratio stands at 47.05%, indicating a stable capital structure. While the balance sheet is stable, there is room for improvement in equity returns.
Cash Flow
80
Positive
Digital Realty exhibits a significant free cash flow growth rate of 43.78% TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio of 0.67 and a free cash flow to net income ratio of 1.0 highlight efficient cash flow management. The cash flow position is robust, supporting future growth and stability.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue5.77B5.55B5.48B4.69B4.43B3.90B
Gross Profit3.18B3.04B2.88B2.67B2.65B2.39B
EBITDA3.68B2.87B3.16B2.29B3.60B2.10B
Net Income1.38B602.49M948.84M377.68M1.71B356.40M
Balance Sheet
Total Assets48.71B45.28B44.11B41.48B36.37B36.08B
Cash, Cash Equivalents and Short-Term Investments3.55B3.87B1.63B141.77M142.70M108.50M
Total Debt19.75B18.01B18.97B18.07B14.96B14.77B
Total Liabilities23.85B22.11B23.12B21.86B17.85B17.59B
Stockholders Equity22.91B21.34B19.12B17.58B18.00B17.72B
Cash Flow
Free Cash Flow2.38B2.26B1.63B-983.71M-818.54M-472.14M
Operating Cash Flow2.38B2.26B1.63B1.66B1.70B1.71B
Investing Cash Flow-2.37B-1.91B-1.12B-4.70B-1.06B-2.60B
Financing Cash Flow1.55B2.06B963.47M2.97B-590.63M935.69M

Digital Realty Technical Analysis

Technical Analysis Sentiment
Negative
Last Price163.24
Price Trends
50DMA
170.81
Negative
100DMA
168.37
Negative
200DMA
166.89
Negative
Market Momentum
MACD
-2.17
Positive
RSI
39.68
Neutral
STOCH
29.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DLR, the sentiment is Negative. The current price of 163.24 is below the 20-day moving average (MA) of 166.38, below the 50-day MA of 170.81, and below the 200-day MA of 166.89, indicating a bearish trend. The MACD of -2.17 indicates Positive momentum. The RSI at 39.68 is Neutral, neither overbought nor oversold. The STOCH value of 29.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DLR.

Digital Realty Risk Analysis

Digital Realty disclosed 10 risk factors in its most recent earnings report. Digital Realty reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Digital Realty Peers Comparison

Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$4.95B22.474.06%5.06%2.26%10.15%
71
Outperform
$55.67B42.786.37%2.99%5.64%12.49%
69
Neutral
$4.95B79.821.30%4.34%13.07%-4.94%
65
Neutral
$8.62B10.2214.93%1.79%1.38%4370.96%
62
Neutral
$13.11B3,802.530.07%5.10%3.24%-97.73%
60
Neutral
$14.65B102.63-0.12%6.21%3.12%-116.29%
53
Neutral
$1.22B3.15-6.08%5.81%-8.21%-81.31%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DLR
Digital Realty
163.24
18.24
12.58%
ARE
Alexandria Equities
84.70
-27.06
-24.21%
BXP
Boston Properties
76.83
6.47
9.20%
CUZ
Cousins Properties
29.47
2.28
8.39%
KRC
Kilroy Realty
42.70
10.15
31.18%
VNO
Vornado Realty
41.29
8.49
25.88%

Digital Realty Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Digital Realty Approves 2025 Carried Interest Plan
Positive
Aug 28, 2025

On August 27, 2025, Digital Realty Trust, Inc. approved the Digital Realty 2025 Carried Interest Plan to incentivize and retain key employees through carried interest and appreciation interest awards. This plan aims to recognize the success of strategic capital ventures and involves granting awards to executives, including the CEO and CFO, with specific carried interest percentages. The plan’s implementation highlights Digital Realty’s commitment to aligning employee incentives with the company’s strategic goals, potentially impacting its market positioning by fostering employee engagement and investment success.

Financial Disclosures
Digital Realty Releases Q2 2025 Financial Results
Neutral
Jul 24, 2025

On July 24, 2025, Digital Realty announced its financial results for the quarter ending June 30, 2025. The company released a press statement and supplemental information on its website, detailing key financial data and operational highlights. This announcement is significant for stakeholders as it provides insights into the company’s performance and strategic positioning in the data center industry.

Private Placements and FinancingBusiness Operations and Strategy
Digital Realty Issues €850 Million Euro Notes
Positive
Jun 25, 2025

On June 25, 2025, Digital Dutch Finco B.V., a subsidiary of Digital Realty Trust, issued €850 million in Euro Notes due 2034, with a 3.875% interest rate. The proceeds, approximately €836.6 million after expenses, will be used to repay borrowings, acquire properties, and support general corporate purposes, positioning the company for strategic growth and operational flexibility.

Private Placements and Financing
Digital Realty Prices €850M Euro Notes Due 2034
Neutral
Jun 17, 2025

On June 17, 2025, Digital Realty announced the pricing of €850 million of 3.875% Guaranteed Notes due 2034 through its subsidiary, Digital Dutch Finco B.V. These Euro Notes are senior unsecured obligations guaranteed by Digital Realty Trust, Inc. and are being sold outside the United States. The proceeds will be used for repaying borrowings, acquiring properties, funding development opportunities, and other corporate purposes, aligning with the company’s REIT status.

Private Placements and FinancingBusiness Operations and Strategy
Digital Realty’s Subsidiary Offers Euro-Denominated Notes
Neutral
Jun 17, 2025

On June 17, 2025, Digital Dutch Finco B.V., a subsidiary of Digital Realty, initiated an offering of Euro-denominated Guaranteed Notes, which are senior unsecured obligations guaranteed by Digital Realty Trust, Inc. and its operating partnership. The proceeds from this offering are intended for various corporate purposes, including repaying borrowings, acquiring properties, and funding development opportunities, aligning with Digital Realty’s strategy to maintain its REIT status and enhance its operational capabilities.

Shareholder Meetings
Digital Realty Holds Annual Stockholders Meeting
Neutral
Jun 10, 2025

On June 6, 2025, Digital Realty Trust, Inc. held its Annual Meeting of Stockholders where several proposals were voted on. The stockholders elected directors to serve until the 2026 meeting, ratified KPMG LLP as the accounting firm for 2025, approved executive compensation on an advisory basis, and approved an amended employee stock purchase plan. A stockholder proposal regarding the human right to water was not approved.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 30, 2025