Shares of Digital Realty Trust surged 8.8% to $195.07 on July 24 after the data center landlord posted a blockbuster second quarter and lifted its full-year outlook for a second consecutive time, betting that insatiable AI infrastructure demand will keep its growth engine running well into 2027.
Revenue Jumped 29% as AI Tenants Filled Racks at Record Pace. Total revenues of $1.9 billion represented an 18% sequential increase from Q1 and a 29% jump compared to the same quarter last year.
That handily topped the $1.66 billion Wall Street consensus.
The top-line momentum was driven by strong leasing activity across all regions, particularly in smaller deployments and interconnection — the wiring that links cloud tenants to one another inside Digital Realty's buildings. For shareholders, this breadth matters: it signals demand isn't tethered to any single hyperscaler's capex cycle.
Pricing Power Hit a New High, Sending Profits Past Expectations. Cash renewal spreads — the rent increase a landlord can charge when an existing lease rolls over — surged to a record 25%+.
Core FFO (funds from operations, the REIT equivalent of earnings) excluding one-time items reached $2.13 per share, up 14% year-over-year. That pricing leverage drops almost directly to the bottom line because the buildings are already built, meaning each extra dollar of rent carries minimal additional cost.
A Record Backlog Underpins the Guidance Raise — and the Bull Case. A record $1.9 billion signed-but-not-started backlog — covering roughly 30% of in-place data center revenue — plus two post-quarter hyperscale leases worth $410 million in annualized rent powered the confidence to raise guidance.
Management lifted 2026 Core FFO to $8.15–$8.20 per share (from $8.00–$8.10) and boosted the revenue outlook to $6.85–$6.95 billion (from $6.65–$6.75 billion).
Capital spending was also bumped by $750 million to $4.25–$4.75 billion, reflecting accelerating development starts.
The Valuation Question Investors Can't Ignore. At a 47x trailing P/E ratio, the stock already prices in years of growth.
Net debt-to-adjusted EBITDA sits at 4.7x , manageable but rising alongside that heavier capex bill. If AI buildout slows or power constraints crimp new supply, today's premium could prove justified — or painfully rich.