Digital Realty Earnings: Long-Term Trajectory Is Steady Despite Signs of Huge Demand

Digital Realty posted eye-popping booking and re-leasing spreads during the first quarter, but the heightened levels don’t reflect new norms or change our outlook. Management said that customers’ artificial intelligence needs are behind this quarter’s strength, and we continue to believe the AI phenomenon puts Digital Realty in a great position. However, we are always cautious not to get too high or low in response to notoriously choppy booking results, and even if there were continual demand for much higher bookings, Digital Realty wouldn’t have the capacity to meet it. Our forecast already reflects the very good position we believe Digital Realty is in, and we’re maintaining our $135 fair value estimate.