Is Digital Realty Trust Poised to Capture the AI Data Center Boom?

The global shift toward artificial intelligence (AI) is reshaping the data center landscape, creating unprecedented demand for infrastructure capable of handling high-density computing workloads. As enterprises and cloud providers race to deploy AI at scale, the ability to retrofit existing facilities and build AI-optimized infrastructure has become a critical differentiator. Digital Realty Trust, a leading data center REIT, appears well-positioned to capitalize on this transformation. By leveraging its extensive portfolio, strategic partnerships, and proactive retrofitting initiatives, the company is aligning itself with the long-term growth trajectory of the AI-driven economy.

Retrofitting for AI: A Strategic Imperative

Digital Realty's approach to AI infrastructure is twofold: retrofitting existing data centers and constructing new facilities tailored to AI workloads. Retrofitting a standard data center to meet AI requirements-a process that can take up to 18 months-demands significant investment in advanced cooling systems, power management, and connectivity. The company has embraced this challenge, implementing cutting-edge liquid cooling technologies and energy-efficient solutions at its Manassas, Northern Virginia campus in collaboration with NVIDIA. These efforts are not merely incremental upgrades but foundational shifts to address the unique demands of AI, such as high-density power consumption and thermal management.

The partnership with NVIDIA, a pioneer in AI hardware, underscores Digital Realty's commitment to innovation. By co-developing next-generation infrastructure, the REIT is setting industry benchmarks for AI-optimized data centers. This alignment with a technology leader not only enhances its technical capabilities but also signals to customers that Digital Realty is a reliable partner for future-proof infrastructure.

Financial Momentum and Customer Leverage

Digital Realty's strategic focus on AI is already translating into financial performance. In Q3 2025, the company reported record core FFO per share of $1.89, a 13% year-over-year increase, driven by robust leasing activity and a $852 million backlog. Notably, 50% of its Q3 bookings were AI-related, highlighting the accelerating demand for its services. This trend is further supported by the REIT's existing relationships with major tech firms, including Microsoft, Alphabet, and Amazon, which provide a stable foundation for scaling AI infrastructure.

The company's global portfolio of over 300 facilities across 50+ markets offers a unique advantage. By retrofitting and expanding its footprint, Digital Realty can meet the localized needs of AI-driven enterprises while maintaining economies of scale. Its 5 gigawatts of IT load capacity dedicated to AI workloads further solidify its role as a key player in the sector.

Long-Term Growth and Industry Dynamics

The AI data center boom is not a short-term fad but a structural shift in computing demand. As AI models grow in complexity and adoption spreads across industries, the need for specialized infrastructure will only intensify. Digital Realty's proactive retrofitting strategy, combined with its emphasis on innovation and customer retention, positions it to capture a significant share of this growth.

However, challenges remain. Retrofitting existing facilities is capital-intensive and time-consuming, requiring sustained investment and operational expertise. Additionally, competition from other REITs and hyperscale providers could intensify as the market expands. Yet, Digital Realty's first-mover advantage in AI infrastructure, coupled with its established customer base, provides a buffer against such risks.

Conclusion

Digital Realty Trust's strategic alignment with the AI revolution-through retrofitting, partnerships, and financial discipline-makes it a compelling candidate for long-term growth. By transforming its infrastructure to meet the demands of tomorrow's computing landscape, the REIT is not only addressing current market needs but also securing its relevance in an AI-dominated future. For investors seeking exposure to the data center sector, Digital Realty's proactive approach and robust financials offer a compelling case for inclusion in a diversified portfolio.