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Why the Landlord of the AI Boom Could Outlast the Chipmakers

Submitted by Sam Quirke. Posted: 8/7/2026.

Almost every conversation about the AI boom recently seems to circle back to the same handful of names—the chipmakers designing the silicon and the tech giants renting out the computing power. But there is a quieter way to play the same boom, one most investors overlook entirely. Somebody, after all, has to own the enormous physical buildings where it all runs.

That's where Digital Realty Trust Inc. (NYSE: DLR) comes in. As one of the largest owners and operators of data center campuses in the world, Digital Realty is effectively the landlord of the AI revolution, providing the power, cooling and connectivity that hyperscalers and enterprises depend on to run their most demanding workloads.

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It's structured as a real estate investment trust, or REIT, meaning it owns income-producing property and is required to distribute the bulk of its taxable income to shareholders as dividends. That's exactly why this type of business has long been a favorite of income-focused investors. While Digital Realty doesn't profit directly from AI, it does benefit from the increasingly scarce real estate and power that support it.

Why Owning the Buildings Is Such a Powerful Position

The appeal of Digital Realty's model lies in scarcity. Building a modern data center is not simply a matter of pouring concrete—it requires vast amounts of power, sophisticated cooling and dense network connectivity, all in locations where those resources are increasingly difficult to secure. That combination is enormously difficult to replicate, giving existing campus owners a powerful competitive moat.

As AI has sent demand for computing capacity soaring, that moat has become more valuable than ever. Digital Realty has been reporting record bookings in the part of its business that connects thousands of customers across its global network of facilities, with demand driven directly by companies scrambling to deploy AI. When suitable sites are scarce and demand is surging, the owners of those sites hold most of the cards.

The financial picture reflects this. The company has been steadily growing the rent it collects, holds a substantial backlog of contracted business that has been signed but not yet started, and recently raised its forward guidance for the year. It has also been expanding aggressively, snapping up a large portfolio of data centers on attractive terms and expanding its international footprint.

A Stronger Balance Sheet to Fund the Growth

One of the more encouraging developments has been the improvement in Digital Realty's financial footing. Funding the construction of new data centers is enormously capital-intensive, so the strength of the balance sheet matters a great deal. Here, the trend has been firmly positive.

The company's leverage has fallen to a multiyear low, down significantly from its peak a few years ago, and it holds substantial liquidity along with considerable capacity to fund future development. With the vast majority of its debt locked in at fixed rates, it is also relatively well insulated from the threat of rising interest costs.

This flexibility allows Digital Realty to keep investing through the buildout rather than being forced to pull back. In a capital-hungry industry, having the balance sheet to fund growth is itself a meaningful advantage over less well-positioned rivals.

What the Analysts Are Saying

Wall Street has taken notice of these results and the upside potential. Deutsche Bank reiterated its Buy rating with a price target of $229 last week, while RBC Capital Markets did the same with a target of $227.

With the stock trading around $193, those targets imply roughly 18% upside from current levels.

That optimism is reflected more broadly, too. The overall MarketBeat consensus rating on the stock currently sits at a Moderate Buy, suggesting the analyst community as a whole sees room for the shares to climb.

For a company sitting at the heart of one of the decade's most powerful investment trends, that combination of a supportive consensus and double-digit implied upside is worth attention.

The Case for Caution

Still, for those of us on the sidelines, there are legitimate reasons to be careful. The most obvious is valuation: The stock is not cheap and trades at a meaningful premium to where it was last year. That leaves less room for error if growth disappoints.

Income-focused investors, in particular, have a fair complaint. Digital Realty's dividend has been frozen at the same level since 2022, leaving the yield at just 2.5%, comparatively modest for a REIT and below many of its peers. For a stock traditionally bought for the income it produces more than for basic share-price appreciation, that stagnation could be a drawback.

However, for investors still looking to gain exposure to the AI buildout without going all-in on a chipmaker, Digital Realty offers a refreshingly different route in. As the company that owns the buildings needed to house all that infrastructure, it may not grab headlines the way chipmakers do, but the landlord of the AI boom is quietly in one of the strongest positions of them all.