Digital Reality Trust has significantly raised its fiscal 2026 forecast for funds from operations, driven by robust leasing activity from cloud computing and AI users. According to reports from Reuters, the company now expects adjusted funds from operations in the range of $8.15 to $8.20 per share, compared with its earlier projection of $8 to $8.10 per share. Additionally, Digital Realty has upped its annual total revenue forecast to be between $6.85 billion and $6.95 billion, from its earlier projection of $6.65 billion to $6.75 billion. The enhanced forecasts reflect the company's confidence in sustained demand from cloud and AI customers, with the REIT betting on resilient leasing momentum to drive continued growth. Recent analysis from Simply Wall St projects the company's revenue to reach $8.6 billion by 2029 with earnings of $1.0 billion, implying 10.8% yearly revenue growth.
The Austin, Texas-based real estate investment trust delivered impressive second-quarter results that exceeded analyst expectations. As reported by Reuters, the company posted revenue of $1.92 billion for the quarter ended June 30, representing a 29% increase and beating analysts' average estimate of $1.66 billion. Adjusted funds from operations came in at $2.65 per share for the quarter, significantly ahead of the estimated $1.86 per share. According to data compiled by LSEG, the strong performance demonstrates the company's ability to capitalize on the surge in AI infrastructure demand. In the second quarter of 2026, Digital Realty Trust reported higher sales of $1,145.94 million and revenue of $1,924.04 million year over year, though net income and earnings per share declined versus the prior period.
Digital Realty has positioned itself as a major beneficiary of the global boom in artificial intelligence adoption, which requires vast amounts of computing power housed in specialized facilities. According to Reuters, the company has focused on expansions and entering new markets to capitalize on this trend. The REIT is set to acquire a larger stake in three data centers in Northern Virginia from asset manager Blackstone in a $3.5 billion cash-and-stock deal, strengthening its position in the world's largest data center market. This strategic acquisition demonstrates the company's commitment to expanding its AI infrastructure capabilities, with the planned acquisition of Blackstone's stakes in three fully leased hyperscale data centers supporting the company's growth strategy.
The enhanced forecasts have positively impacted investor sentiment, with shares rising 3% in extended trading following the announcement. As reported by Reuters, Digital Realty Trust is an Austin-based real estate investment trust that provides data center, colocation and interconnection solutions, leasing managed data centers to clients across industries including cloud, information technology, social networking, communications, and manufacturing. The company's AI-driven leasing backlog and raised FFO outlook have reshaped its investment narrative, with Simply Wall St community estimates showing fair value estimates ranging from $218.72 to $262.81 per share. However, investors should remain aware of how quickly new capacity in key markets could test demand, as the company continues to fund growth through capital raises and expansion moves. The stock currently trades with a Moderate Buy rating and an average price target of $216.17 among analysts.
