Digital Realty raises 2026 outlook on AI-driven leasing surge
Digital Realty has lifted its annual funds from operations and revenue forecasts after a second-quarter earnings beat driven by sustained demand for artificial intelligence infrastructure.
Digital Realty raised its full-year financial forecasts on Thursday, signaling that the infrastructure build-out required for artificial intelligence is accelerating faster than initial expectations. The real estate investment trust now projects fiscal 2026 adjusted funds from operations—a standard cash flow metric for REITs—of $8.15 to $8.20 per share, up from a prior range of $8.00 to $8.10. The company simultaneously lifted its annual total revenue outlook to between $6.85 billion and $6.95 billion, stepping up from an earlier projection of $6.65 billion to $6.75 billion.
The upward revisions were anchored by a second-quarter performance that significantly outpaced market consensus. For the quarter ended June 30, revenue surged 29 per cent to $1.92 billion, easily surpassing the average analyst estimate of $1.66 billion, according to data compiled by LSEG. Earnings similarly beat expectations, with adjusted FFO reaching $2.65 per share compared to the anticipated $1.86 per share.
These figures illustrate the tangible financial rewards flowing to specialized real estate operators amid the generative AI race. Digital Realty leases managed facilities to clients across cloud computing, information technology, social networking, communications, and manufacturing. Because generative AI demands vast amounts of computing power housed in specialized facilities, capital expenditure commitments from technology clients are reliably converting into recurring leasing revenue for the REIT.
To sustain this growth, the Austin, Texas-based company is actively expanding into new markets and consolidating its presence in established hubs. A central piece of this strategy is a pending $3.5 billion cash-and-stock transaction to acquire a larger stake in three Northern Virginia data centers from asset manager Blackstone. This move solidifies the company's footprint in the world's largest data center market. Investors responded to the earnings report and strategic positioning by pushing the company's shares up 3 per cent in extended trading.
