23 stories mentioning DLRUpdated 2h ago
Every FINWIRES story that references DLR, newest first.
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $221.90, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)
(Updates with index/price moves, macroeconomic data, and company/geopolitical news from the first paragraph.)US equity indexes closed mixed as government bond yields and crude oil declined amid hopes of the resumption of Iran peace talks.The Dow Jones Industrial Average rose 0.5% to 51,947.25, and the S&P 500 edged up by less than 0.1% to 7,411.98. The Nasdaq Composite fell 0.6% to 24,975.82. Real estate, materials, and communication staples topped the gainers. All but one sector, technology, traded higher.President Donald Trump said the US and Iran remain in talks and that he believes Tehran is "getting more serious," CNN reported late Friday. Earlier in the day, Trump met with top advisers and Cabinet officials to discuss a potential escalation if negotiations are not fruitful, a source told CNN.Pakistan is exploring a path toward a resumption of stalled talks between the US and Iran over ending the war, following a push initiated by China, Reuters reported, citing sources, on Friday. Exploratory discussions took place during a visit by Iran's Interior Minister Eskandar Momeni to Islamabad this week -- his second within the last 10 days, three Pakistani sources told the news agency. All three sources cautioned that obstacles to talks with the US remained high, per the news report.Tracking data showed two oil tankers sailing through the Gulf of Aden on Friday despite threats from the Iran-aligned Houthis, CNN reported. The Houthi attacks on two Saudi Arabian tankers in the Red Sea chokepoint on Thursday forced several other tankers to turn around and head north through the Suez Canal, potentially using a much longer route to reach Asia by sailing around Africa, Reuters reported.The front-month US West Texas Intermediate dropped 2.3% to $90.07 a barrel, and global benchmark North Sea Brent slumped 2.8% to $97.85 a barrel, retreating from a surge this week amid the Houthi attacks in the Red Sea targeting Saudi crude oil exports.The latest jump in oil prices is likely to be short-lived, a Dow Jones news report cited a Julius Baer note, referring to Brent crude surpassing the $100 mark Thursday for the first time since the US-Iran ceasefire agreement in June. Despite fresh attacks on tankers in the Red Sea and the Strait of Hormuz, the renewed fighting appears to reflect efforts by the parties to strengthen their bargaining positions ahead of another round of negotiations, the news report cited the note.Most US Treasury yields fell as a decline in crude oil helped keep a lid on inflation worries. The 10-year declined two basis points to 4.68%, retreating from its highest seen in a year on Thursday. The two-year dropped 2.3 basis points to 4.34%, after yields hit fresh 52-week highs twice this week.In precious metal markets, gold futures edged up 0.1% to $4,055.1, and silver futures advanced 0.6% to $58.41.In company news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and raised its 2026 core FFO and sales guidance. Shares surged nearly 11%, among the top gainers on the S&P 500.American Express (AXP) Q2 earnings topped market estimates, while revenue missed expectations. Shares dropped 4.3%, the steepest decliner on the Dow.In economic news, the July flash reading of manufacturing conditions from S&P Global slipped to 53.8 from 53.9 in June, compared with the 54.4 print expected in a survey compiled by Bloomberg.New-home sales rose to a 628,000 annual rate in June from an upwardly revised 618,000 rate in May, compared with the 607,000 rate expected in a survey compiled by Bloomberg. Home sales were still down 5.6% from a year ago.
Financial stocks rose in late Friday afternoon trading, with the NYSE Financial Index adding 0.8% and the State Street Financial Select Sector SPDR ETF (XLF) increasing 0.7%.The Philadelphia Housing Index gained 1.6%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) added 2.3%.Bitcoin (BTC-USD) was declining 1.5% to $64,087, and the yield for 10-year US Treasuries shed 2.4 basis points to 4.679%.In economic news, the July flash reading of manufacturing conditions from S&P Global slipped to 53.8 from 53.9 in June, compared with the 54.4 print expected in a survey compiled by Bloomberg.New-home sales rose to a 628,000 annual rate in June from an upwardly revised 618,000 rate in May, compared with the 607,000 rate expected in a survey compiled by Bloomberg. Home sales were still down 5.6% from a year ago.In corporate news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and the company also raised its 2026 core FFO and revenue guidance. Shares surged past 11%.BlackRock (BLK) started marketing $12.3 billion in high-grade bonds to finance a Meta Platforms (META) data center project, Bloomberg reported. BlackRock shares rose 1.7%.American Express' (AXP) Q2 earnings topped Wall Street's estimates, but revenue missed expectations, while the company now expects full-year revenue to grow at the high end of its previous guidance range. Its shares fell 4.6%.Tompkins Financial (TMP) shares jumped past 8% after it reported better-than-expected Q2 results.Safety Insurance (SAFT) shares soared 42%. The company said late Thursday it entered an agreement to be acquired by an affiliate of Mapfre in a $1.54 billion all-cash deal.
(Updates with index/price moves, macroeconomic data and company/geopolitical news from the first paragraph.)US equity indexes were mixed as a retreat in crude oil and government bond yields accompanied an all-sector rally midday Friday.The Dow Jones Industrial Average climbed 0.5% to 51,970.5, and the S&P 500 rose 0.4% to 7,434.8. The Nasdaq Composite was 0.1% lower at 25,112.3. Real estate, materials, and communication services topped the gainers.The front-month US West Texas Intermediate dropped 3.6% to $88.89 a barrel, and global benchmark North Sea Brent slumped 4.3% to $96.34 a barrel.The retreat has come as a relief from a surge Thursday when the Iran-aligned Houthi rebels attacked two Saudi Arabian tankers in the Red Sea chokepoint. Separately, President Donald Trump warned of a "massive attack" to continue degrading Iran's ability to attack maritime traffic in the Strait of Hormuz. The US Central Command said it completed the 13th consecutive night of strikes on Iran Thursday evening, in line with that strategic goal as well as returning Iran to negotiations in a meaningful way.The latest jump in oil prices is likely to be short-lived, a Dow Jones news report cited a Julius Baer note, referring to Brent crude surpassing the $100 mark Thursday for the first time since the US-Iran ceasefire agreement in June. Despite fresh attacks on tankers in the Red Sea and the Strait of Hormuz, the renewed fighting appears to reflect efforts by the parties to strengthen their bargaining positions ahead of another round of negotiations, the news report cited the note.Recent data showed China's oil imports during H1 slumped 11% year-on-year to 9.9 million barrels per day, according to a report from the Middle East Economic Survey. Imports from the Middle East sank by 37% to 3 million bpd, the lowest level since 2007, MEES said.Most US Treasury yields fell as a decline in crude oil helped keep a lid on inflation worries. The 10-year declined 3.8 basis points to 4.67%, retreating from its highest seen in a year on Thursday. The two-year declined 4.2 basis points to 4.32%, after yields hit fresh 52-week highs twice this week.In precious metal markets, gold futures edged up 0.5% to $4,069.2, and silver futures jumped 1.5% to $58.92.In company news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and the company also raised its 2026 core FFO and sales guidance. Shares of the firm climbed nearly 14%, the top gainer on the S&P 500.American Express (AXP) Q2 earnings topped market estimates, while revenue missed expectations. Shares dropped 5.3%, the steepest decliner on the Dow.In economic news, the July flash reading of manufacturing conditions from S&P Global slipped to 53.8 from 53.9 in June, compared with the 54.4 print expected in a survey compiled by Bloomberg.New-home sales rose to a 628,000 annual rate in June from an upwardly revised 618,000 rate in May, compared with the 607,000 rate expected in a survey compiled by Bloomberg. Home sales were still down 5.6% from a year ago.
Financial stocks rose in Friday afternoon trading, with the NYSE Financial Index adding 1.1% and the State Street Financial Select Sector SPDR ETF (XLF) increasing 0.6%.The Philadelphia Housing Index gained 1.9%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) added 2.1%.Bitcoin (BTC-USD) was declining 1.9% to $63,849, and the yield for 10-year US Treasuries was falling 4 basis points to 4.663%.In economic news, new-home sales in the US increased last month for the first time since March as house prices continued to fall, though inventory remained elevated at more than a nine-month supply. Sales of new single-family homes increased 1.6% sequentially in June to a seasonally adjusted annual rate of 628,000, the Census Bureau and the Department of Housing and Urban Development said Friday. Analysts polled by Bloomberg expected a 607,000 print.In corporate news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and the company also raised its 2026 core FFO and revenue guidance. Shares jumped past 13%.BlackRock (BLK) started marketing $12.3 billion in high-grade bonds to finance a Meta Platforms (META) data center project, Bloomberg reported. BlackRock shares rose 1.2%.American Express' (AXP) Q2 earnings topped Wall Street's estimates, but revenue missed expectations, while the company now expects full-year revenue to grow at the high end of its previous guidance range. Its shares fell 5.1%.
Financial stocks were advancing in Friday afternoon trading, with the NYSE Financial Index rising 1.1% and the State Street Financial Select Sector SPDR ETF (XLF) increasing 0.6%.The Philadelphia Housing Index was climbing 1.9%, and the State Street Real Estate Select Sector SPDR ETF (XLRE) added 2.1%.Bitcoin (BTC-USD) was declining 1.9% to $63,849, and the yield for 10-year US Treasuries was falling 4 basis points to 4.663%.In corporate news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and the company also raised its 2026 core FFO and sales guidance. Its shares jumped past 13%.
(Updates with index/price moves and geopolitical news from the first paragraph.)US equity indexes rose as all sectors advanced in Friday's midday trading amid declining crude oil and government bond yields.The Dow Jones Industrial Average climbed 0.7% to 52,083.5, the S&P 500 rose 0.6% to 7,450.1, and the Nasdaq Composite edged up 0.2% to 25,179.5. Real estate, consumer staples, and materials topped the gainers.The front-month US West Texas Intermediate dropped 3.9% to $88.62 a barrel, and global benchmark North Sea Brent slumped 4.5% to $96.20 a barrel. The retreat came as a relief from a surge on Thursday when the Iran-aligned Houthi rebels attacked two Saudi Arabian tankers in the Red Sea chokepoint. Separately, President Donald Trump threatened a "massive attack" on Iran to continue to degrade its ability to attack maritime traffic in the Strait of Hormuz.The latest jump in oil prices is likely to be short-lived, a Dow Jones news report cited a Julius Baer note. Despite fresh attacks on tankers in the Red Sea and the Strait of Hormuz, the renewed fighting appears to reflect efforts by the parties to strengthen their bargaining positions ahead of another round of negotiations, the news report cited the note.Most US Treasury yields fell in midday trading, aiding investor sentiment. The 10-year fell 4.6 basis points to 4.66%, retreating from its highest seen in a year on Thursday. The two-year declined 4.7 basis points to 4.31%, after yields hit fresh 52-week highs twice this week.In company news, Digital Realty Trust (DLR) reported Q2 core funds from operations and operating revenue above market expectations late Thursday, and the company also raised its 2026 core FFO and sales guidance. Shares of the firm surged nearly 15%, the top gainer on the S&P 500.
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $219.52, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)
Digital Realty Trust (DLR) shares rise 1.2% in Wednesday trading after Guggenheim upgraded the company's stock to buy from neutral, with a price target of $200.Trading volume stood at over 1.7 million shares compared with a daily average of nearly 2.8 million.Price: $175.15, Change: $+2.04, Percent Change: +1.18%
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $219.77, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $220.03, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)
The Standard & Poor's 500 index rose 1.8% this week, led by gains in communication services and financials ahead of the holiday weekend.The S&P 500 ended Thursday's session at 7,483.24. This marks the end of the trading week as the US stock market will be closed on Friday in observance of Independence Day.Earlier this week, the S&P 500 closed out June with a 1.1% loss, its first monthly decline since March. Still, it gained 15% in the second quarter and 9.6% in the first half of 2026.On Thursday, US jobs data for June came in mixed. The data showed the US economy added fewer jobs than expected in June, yet the unemployment rate came in lower than forecast.Total nonfarm payrolls rose by 57,000 last month, representing the weakest tally since February and a notable miss versus the consensus estimate for an 113,000 increase. Also, May's gain was downwardly revised to 129,000 from an initial 172,000, while April's tally was lowered to 148,000 from 179,000.Nevertheless, the unemployment rate ticked down to 4.2% from 4.3%. The rate had been expected to remain at 4.3%.Communication services was the best performing sector this week, climbing 4.9%, followed by a 3.7% advance in financials, a 2.8% increase in consumer discretionary and a 2.1% rise in health care. Industrials and materials also rose by more than 1% each, while technology and consumer staples edged higher.Fox (FOXA, FOX) had the largest percentage gains in communication services for the week, with its Class A shares jumping 13% and Class B shares rising 10%. A regulatory filing showed the company entered into a $1 billion senior unsecured term loan credit agreement to help fund a portion of the cash consideration for its pending acquisition of Roku (ROKU). The two-year term loan facility will be available upon completion of the acquisition, with Fox also able to borrow up to an additional $1 billion, it said.Robinhood Markets (HOOD) led the climb in financials, gaining 14%. The company launched perpetual futures with no expiry date tied to commodities like gold, silver, and crude oil, as well as exchange-traded funds, and currencies in Europe, multiple media outlets reported.Real estate declined 1.5% while utilities and energy shed 1% each.Digital Realty (DLR) was among the hardest-hit stocks in real estate, falling 10%. The company said on Tuesday that it priced a secondary public offering of 12.3 million shares by affiliates of Blackstone (BX) at $185.00 each, representing a discount to its Monday closing price of $190.58.Quarterly earnings reports next week are expected from companies including PepsiCo (PEP) and Delta Air Lines (DAL).Economic data will include May consumer credit, June existing home sales, and the June Services Purchasing Managers' Index or PMI.
US equity indexes were higher on Tuesday amid semiconductor-led gains in technology stocks.* US job openings rose to 7.594 million in May, according to the Bureau of Labor Statistics, above the 7.296 million openings expected in a Bloomberg-compiled survey and up from the 7.585 million openings reported in April.* The Conference Board's measure of consumer confidence rose to 91.2 in June from a downwardly revised 90.6 in May, below the 94.4 predicted in a Bloomberg-compiled survey.* The Institute for Supply Management's Chicago PMI fell to 56.7 in June from 62.7 in May, compared with the 55.1 anticipated in a Bloomberg-compiled survey.* August West Texas Intermediate crude oil fell $0.67 to settle at $70.08 per barrel, while August Brent crude, the global benchmark, was last seen down $0.23 at $72.92.* SanDisk (SNDK) shares were up roughly 10%, the top gainer on the S&P 500 and Nasdaq, after Bernstein adjusted the price target for the company to $3,000 from $1,700 while maintaining its outperform rating.* Digital Realty (DLR) shares fell about 5.7%, the worst performer on the S&P 500, after the company said it priced a secondary public offering of 12.3 million shares by affiliates of Blackstone (BX) at $185 each.
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $220.03, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)Price: $180.90, Change: $-9.68, Percent Change: -5.08%
More than 275 temporary and permanent bans on data center development have been passed this year by state and local governments across the US, The Information reported Wednesday, citing its own research.Since 2023, more than 300 such bans have been enacted, and over 75 more are under consideration, the report said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)Price: $239.62, Change: $+5.51, Percent Change: +2.35%
Over 275 Temporary, Permanent Data Center Bans Have Passed This Year, The Information Reports
(Updates with comments from Morgan Stanley starting in 13th paragraph.)Rising interest rates won't stop companies such as Alphabet's (GOOG, GOOGL) Google, Amazon (AMZN) and Microsoft (MSFT) from spending enormous amounts of money to build artificial intelligence data centers because the potential profit far outweighs slightly higher borrowing costs, according to industry analysts.The yield on benchmark 10-year US Treasuries rose to 4.58% on Thursday from 3.96% on Feb. 26 as investors worry that rising inflation could prevent the Federal Reserve from cutting interest rates. Earlier this week, the rate reached its highest level since January 2025. That affects borrowing costs for AI hyperscalers that are on track to spend $800 billion in capital expenditures this year and an additional $1 trillion next year.Rates will rise and inflation will remain a concern as the war in Iran will keep oil above $80 a barrel until February, Peter Tchir, head of macro strategies at Academy Securities, said in an interview with. Still, the expected revenue gain from AI products and services is at this point outweighing concerns that rising rates will dampen the data-center buildout, benefiting companies in and adjacent to the AI space including real estate investment trusts, he said."Right now, the profitability of these data centers and AI, and the perceived profitability, just means that they're not really going to be constrained by 50 or 100 basis points in yield," Tchir said. "These are fairly large bets that this is going to work, and it's going to work in a huge scale, in which case borrowing at 5%, 7% or 9% will turn out kind of trivial."It costs $45 billion to $50 billion to build out 1 gigawatt of data-center capacity, said Mandeep Singh, global head of technology research at Bloomberg Intelligence. SpaceX revealed in its initial public offering prospectus this week that it's renting one of its data centers to Anthropic for $1.25 billion a month, or about $15 billion a year."If it costs $50 billion to build an AI data center, and you're able to generate up to $15 billion in revenue in year one, then it takes three and a half years to get your investment back, and then obviously you'll make returns from year four onward," Singh said in an interview.Analysts agreed that benchmark borrowing costs will continue to rise this year."The bond market is a little bit freaked out, we're seeing inflation and risk in the current environment putting a lot of pressure on longer duration Treasury yields to get to very high levels," Elizabeth Templeton, senior product manager for fixed-income indexes at Morningstar, said in an interview. "Seeing the 30-year yield at 5.1% this week, the highest since 2007, is certainly an indication that there's some worry in the markets right now around inflation. That could certainly continue to impact the 10-year the rest of this year."Smaller AI companies including CoreWeave (CRWV) and Nebius (NBIS) could be affected more by the rise in borrowing costs than hyperscalers Amazon, Google and Microsoft, Bloomberg's Singh said. Those companies and others have already sold $300 billion in debt to fund their AI investments this year, according to Bloomberg News. CoreWeave and Nebius didn't respond to a request for comment.Still, the scale of AI borrowing is so large that it can't be ignored, said Kevin McPartland, an analyst at Crisil Coalition Greenwich. Debt deals that are already underway shouldn't be affected, he said."It doesn't take much of a move when you're talking about billions of dollars of financing to really change the economics," he said. "The devil's advocate would be: These are literally the largest companies in the world that have an incredible amount of free cash flow, and so these are not two- or three-year plans, these are five- and 10-year plans, in which case I'm sure they've modeled out the risk of everything, from interest rates to other geopolitical issues," McPartland said."If you're committed for 10 years to spending tens or hundreds of billions, of course you don't want the cost of financing to go up, but maybe the answer is some short-term slowdowns, but no long-term change in strategic planning."Investors should stay exposed to AI but be more selective, Morgan Stanley analysts said Friday in a note to clients.Increased borrowing costs have led to an uptick in rotation across equities, exposing some weakness in AI-aligned companies, the analysts said. Still, AI earnings were "resilient," volatility is contained, and valuations support staying exposed to the sector. the note said."The recent adjustment does not look like a classic risk-off episode or a wholesale defensive rotation," Morgan Stanley said. "It is better characterized as a selective unwind of crowded AI-led momentum exposure, with higher yields providing an additional tailwind to value."The two main data center REITs -- Equinix (EQIX) and Digital Realty Trust (DLR) -- have been refinancing debt and financing their development at roughly the current level of interest rates for the last couple of years, Jeffrey Langbaum, senior REIT analyst for Bloomberg Intelligence, told.That's dented their earnings growth but hasn't deterred them because the returns they generate from the developments outpace the debt costs, he said. Equinix and Digital Realty didn't respond to requests for comment."The returns they are getting on their developments are well in excess of the costs of capital," he said. "My thesis is that even if overall demand shrinks, they should still be able to get their share because they're keeping the size of their development business at a manageable level and not getting out over their skis and trying to expand too far too fast."Equinix sales in the second quarter that ends on June 30 are pegged at $2.58 billion and adjusted funds from operations are estimated at $11.24 a share, according to estimates compiled by FactSet. If realized, that would be up from $2.26 billion and $9.91 a share, respectively, in Q2 2025.Digital Realty Trust revenue in the second quarter is projected by analysts in a FactSet survey at $1.65 billion, while adjusted funds from operations are seen at $1.80 a share. Sales in Q2 last year were reported at $1.49 billion and AFFO was $1.68 per share.Data-center REITs are seeing a tailwind from momentum behind artificial intelligence expansion, Wells Fargo Investment Institute analysts John Sheehan and Amanda Martinez said in a note to clients earlier this month.REITs have a diverse range of offerings including colocation, which allows for multiple users, from hyperscalers to smaller companies, at a single location and interconnection, which means lower-latency connections and better tenant retention, as "particularly notable features" of some data-center buildouts, the analysts said."We are favorable on the data-center REITs subsector as we believe it possesses durable growth prospects, attractive margins, and solid pricing power," Sheehan and Martinez said in their note. "We also view the sub-sector as an attractive route for gaining exposure to the AI theme within the real estate sector, particularly as AI use cases continue to expand and support sustained demand and pricing power."Academy's Tchir said he expects the 10-year Treasury yield to rise to 5% in the next few months, and that investors are rewarding AI capital spending."We're almost in what I call free money stage, where if you announce $10 billion to spend, your stock goes up $20 billion, so why wouldn't you announce spending?" he said. "We are so underinvested in data centers and AI that even if your project turns out not to be as good as you thought, it's still going to do well, because someone needs that compute right now, and for the foreseeable future."Matthew Leising and Tim WeatherheadPrice: $383.20, Change: $-4.46, Percent Change: -1.15%
Rising interest rates won't stop companies such as Alphabet's (GOOG, GOOGL) Google, Amazon (AMZN) and Microsoft (MSFT) from spending enormous amounts of money to build artificial intelligence data centers because the potential profit far outweighs slightly higher borrowing costs, according to industry analysts.The yield on benchmark 10-year US Treasuries rose to 4.58% on Thursday from 3.96% on Feb. 26 as investors worry that rising inflation could prevent the Federal Reserve from cutting interest rates. Earlier this week, the rate reached its highest level since January 2025. That affects borrowing costs for AI hyperscalers that are on track to spend $800 billion in capital expenditures this year and an additional $1 trillion next year.Rates will rise and inflation will remain a concern as the war in Iran will keep oil above $80 a barrel until February, Peter Tchir, head of macro strategies at Academy Securities, said in an interview with. Still, the expected revenue gain from AI products and services is at this point outweighing concerns that rising rates will dampen the data-center buildout, benefiting companies in and adjacent to the AI space including real estate investment trusts, he said."Right now, the profitability of these data centers and AI, and the perceived profitability, just means that they're not really going to be constrained by 50 or 100 basis points in yield," Tchir said. "These are fairly large bets that this is going to work, and it's going to work in a huge scale, in which case borrowing at 5%, 7% or 9% will turn out kind of trivial."It costs $45 billion to $50 billion to build out 1 gigawatt of data-center capacity, said Mandeep Singh, global head of technology research at Bloomberg Intelligence. SpaceX revealed in its initial public offering prospectus this week that it's renting one of its data centers to Anthropic for $1.25 billion a month, or about $15 billion a year."If it costs $50 billion to build an AI data center, and you're able to generate up to $15 billion in revenue in year one, then it takes three and a half years to get your investment back, and then obviously you'll make returns from year four onward," Singh said in an interview.Analysts agreed that benchmark borrowing costs will continue to rise this year."The bond market is a little bit freaked out, we're seeing inflation and risk in the current environment putting a lot of pressure on longer duration Treasury yields to get to very high levels," Elizabeth Templeton, senior product manager for fixed-income indexes at Morningstar, said in an interview. "Seeing the 30-year yield at 5.1% this week, the highest since 2007, is certainly an indication that there's some worry in the markets right now around inflation. That could certainly continue to impact the 10-year the rest of this year."Smaller AI companies including CoreWeave (CRWV) and Nebius (NBIS) could be affected more by the rise in borrowing costs than hyperscalers Amazon, Google and Microsoft, Bloomberg's Singh said. Those companies and others have already sold $300 billion in debt to fund their AI investments this year, according to Bloomberg News. CoreWeave and Nebius didn't respond to a request for comment.Still, the scale of AI borrowing is so large that it can't be ignored, said Kevin McPartland, an analyst at Crisil Coalition Greenwich. Debt deals that are already underway shouldn't be affected, he said."It doesn't take much of a move when you're talking about billions of dollars of financing to really change the economics," he said. "The devil's advocate would be: These are literally the largest companies in the world that have an incredible amount of free cash flow, and so these are not two- or three-year plans, these are five- and 10-year plans, in which case I'm sure they've modeled out the risk of everything, from interest rates to other geopolitical issues," McPartland said."If you're committed for 10 years to spending tens or hundreds of billions, of course you don't want the cost of financing to go up, but maybe the answer is some short-term slowdowns, but no long-term change in strategic planning."The two main data center REITs -- Equinix (EQIX) and Digital Realty Trust (DLR) -- have been refinancing debt and financing their development at roughly the current level of interest rates for the last couple of years, Jeffrey Langbaum, senior REIT analyst for Bloomberg Intelligence, told.That's dented their earnings growth but hasn't deterred them because the returns they generate from the developments outpace the debt costs, he said. Equinix and Digital Realty didn't respond to requests for comment."The returns they are getting on their developments are well in excess of the costs of capital," he said. "My thesis is that even if overall demand shrinks, they should still be able to get their share because they're keeping the size of their development business at a manageable level and not getting out over their skis and trying to expand too far too fast."Equinix sales in the second quarter that ends on June 30 are pegged at $2.58 billion and adjusted funds from operations are estimated at $11.24 a share, according to estimates compiled by FactSet. If realized, that would be up from $2.26 billion and $9.91 a share, respectively, in Q2 2025.Digital Realty Trust revenue in the second quarter is projected by analysts in a FactSet survey at $1.65 billion, while adjusted funds from operations are seen at $1.80 a share. Sales in Q2 last year were reported at $1.49 billion and AFFO was $1.68 per share.Data-center REITs are seeing a tailwind from momentum behind artificial intelligence expansion, Wells Fargo Investment Institute analysts John Sheehan and Amanda Martinez said in a note to clients earlier this month.REITs have a diverse range of offerings including colocation, which allows for multiple users, from hyperscalers to smaller companies, at a single location and interconnection, which means lower-latency connections and better tenant retention, as "particularly notable features" of some data-center buildouts, the analysts said."We are favorable on the data-center REITs subsector as we believe it possesses durable growth prospects, attractive margins, and solid pricing power," Sheehan and Martinez said in their note. "We also view the sub-sector as an attractive route for gaining exposure to the AI theme within the real estate sector, particularly as AI use cases continue to expand and support sustained demand and pricing power."Academy's Tchir said he expects the 10-year Treasury yield to rise to 5% in the next few months, and that investors are rewarding AI capital spending."We're almost in what I call free money stage, where if you announce $10 billion to spend, your stock goes up $20 billion, so why wouldn't you announce spending?" he said. "We are so underinvested in data centers and AI that even if your project turns out not to be as good as you thought, it's still going to do well, because someone needs that compute right now, and for the foreseeable future."Matthew Leising and Tim WeatherheadPrice: $386.34, Change: $-1.32, Percent Change: -0.34%
Digital Realty Trust (DLR) has an average rating of overweight and mean price target of $217.25, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://finwires.com/en/contact)
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We increase our 12-month target by $40 to $230, on a forward P/FFO of 28.0x, a premium to the three-year forward average of 21.9x. We lift our 2026 FFO estimate by $0.24 to $8.20 and increase 2027 by $0.17 to $9.06. We believe DLR's premium is justified given the accelerating growth of AI spend and management's history of executing on data center developments at yields over 10% historically combined with a record backlog. DLR continues to benefit from the accelerating demand for data centers related to AI growth with its strongest 0-1MW quarter ever totaling $98M in new signings. Total backlog of signed, but not commenced leases has reached a new record of $1.8B providing visibility into 2027-2028 growth. The development pipeline was up 50% Q/Q to 1.2GW under construction with 61% pre-leased at an attractive 11.4% yield. We believe DLR is likely to continue benefiting from interconnection and low-latency data center demands with favorable re-leasing spreads for renewals of its core operating portfolio.
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