Digital Realty DLR shares have risen 19% in the past six months compared with the industry’s 7.8% growth.
Digital Realty is benefiting from strong cloud and AI-driven demand, which is supporting robust leasing activity, record bookings and a growing backlog that enhances revenue visibility. The company continues expanding its global footprint through acquisitions and development projects while maintaining significant pre-leased capacity. Strong liquidity, improving leverage metrics, access to low-cost and diversified capital sources and higher 2026 core FFO guidance position Digital Realty for sustained long-term growth.
Analysts seem positive about this Zacks Rank #3 (Hold) company, with the Zacks Consensus Estimate for its 2026 funds from operations (FFO) per share revised marginally northward to $8.06 over the past month.
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Factors Behind DLR Stock’s Price Surge: Will This Continue?
Digital Realty continues to benefit from strong demand for data center infrastructure as enterprises accelerate cloud adoption, AI deployments and IT outsourcing. The company serves a highly diversified customer base spanning cloud, content, information technology, network and enterprise industries. As of March 31, 2026, Digital Realty operated 309 data centers across more than 55 metropolitan areas worldwide and supported more than 5,500 customers. Portfolio occupancy stood at 90.1%, while the addition of 116 new customer logos during the first quarter highlights the breadth of demand and the recurring nature of its revenue stream.
Leasing activity remains a key growth driver. During the first quarter of 2026, Digital Realty signed $707 million of total bookings at 100% share, including $98 million from the 0-1 megawatt and interconnection category. The company’s backlog of signed but not yet commenced leases increased to $1.8 billion, providing revenue visibility well into 2027 and 2028. Positive cash renewal spreads of 5% further demonstrate pricing power, while management’s decision to raise 2026 Core FFO guidance to $8.00-$8.10 per share reflects confidence in future earnings growth.
Digital Realty is expanding its global footprint through strategic land acquisitions and connectivity-focused investments. During the first quarter of 2026, the company acquired development sites in Atlanta, Portland and Milan while strengthening its European presence through the acquisition of Telepoint in Bulgaria. Subsequent to the first quarter, it also expanded its presence in Malaysia through acquisitions in Cyberjaya and opened its first data center in Barcelona in May 2026. These investments added more than one gigawatt of future capacity and position the company to capitalize on growing hyperscale, cloud and AI-related demand across key markets.
Development activity remains robust. Management reported approximately 1.2 gigawatts of capacity under construction as of March 31, 2026, with 61% already pre-leased and expected to generate an average yield of 11.4%. This level of pre-leasing reduces lease-up risk and supports future revenue commencements. To support the pipeline, Digital Realty increased its 2026 development capital expenditure outlook to $3.5-$4.0 billion, net of partner contributions.
The company maintains financial flexibility to fund its growth initiatives. As of March 31, 2026, Digital Realty held $2.43 billion in cash and cash equivalents while leverage improved to 4.7x net debt-to-Adjusted EBITDA. Its largely fixed-rate debt structure carries a low 2.8% weighted-average coupon and a 4.7-year average maturity. Combined with equity issuance and planned asset recycling activities, this liquidity position provides ample capacity to support future development and expansion plans.
Given the above-mentioned factors, we believe the rising trend in the stock is expected to continue in the near term.
Key Risks for DLR Stock
Competition from other industry players is likely to lead to aggressive pricing pressure and weigh on Digital Realty’s prospects. A substantial debt burden adds to its woes.
Stocks to Consider
Some better-ranked stocks from the broader REIT sector are American Tower AMT and Lamar Advertising LAMR, each carrying a Zacks Rank of #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for AMT’s 2026 FFO per share is pegged at $10.95, which indicates year-over-year growth of 1.77%.
The Zacks Consensus Estimate for LAMR’s full-year FFO per share is pinned at $8.81, which suggests an increase of 6.66% from the year-ago period.
Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.
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American Tower Corporation (AMT): Free Stock Analysis Report
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Digital Realty Trust, Inc. (DLR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).