Digital Realty Trust (NYSE: DLR)
Riding the AI Data Center Wave with Strong Upside Potential
Digital Realty Trust is emerging as a key play in the AI-driven data center space, making it a standout stock as we enter the fourth quarter. The company’s robust fundamentals are being fueled by strong demand from hyperscalers—large tech firms like Amazon, Google, and Microsoft—that rely on cutting-edge data centers to power their AI and cloud operations. With tight power supply and high barriers to entry in new data center projects, Digital Realty is well-positioned to capture this demand.
The stock has already climbed 22% this year, reflecting market confidence in its growth trajectory. Analysts are also taking notice, with Goldman Sachs recently reaffirming its bullish stance. Analyst James Schneider raised his price target for Digital Realty by $10 to $185, indicating more than 13% upside from current levels. Schneider highlights that investors are particularly optimistic about the company’s leasing and pricing metrics heading into the third quarter earnings report.
Key drivers for Digital Realty include the sustainability of strong AI-related demand and favorable pricing trends. The company’s ability to meet high investor expectations in upcoming earnings could provide further upside, especially if management offers positive guidance on future joint ventures or additional capital expenditures. While the broader data center group benefits from ongoing investments by hyperscalers, Digital Realty’s strong positioning and continued momentum make it a top pick for investors looking to capitalize on the AI data center boom.
With robust market fundamentals and a clear growth path ahead, Digital Realty Trust is a compelling choice for those seeking exposure to the rapidly expanding AI infrastructure space.
