How's Digital Realty doing these days?
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SUMMARY
Digital Realty is doing well these days, and the evidence now looks strong enough to call it a real AI infrastructure winner rather than just an AI story.
The clearest signal is that demand is broadening, not narrowing. Q1 2026 combined record leasing, 116 new customer logos, a record quarter in smaller and interconnection-heavy bookings, and a very large hyperscale AI lease.
AI is now showing up in actual revenue pathways. It is visible in giant leases, but also in smaller 0–1 MW requirements, Innovation Labs, liquid-cooling work, and hybrid-cloud test environments.
The backlog is powerful, but it also changes the question. Digital Realty has $1.8 billion of signed-but-not-started annualized rent, which gives visibility into 2027 and 2028, but the 19-month signing-to-start lag means execution is now the real test.
Pricing is getting better because supply cannot appear instantly. Renewal spreads improved, the company raised its renewal-spread outlook, and the broader market still looks constrained by power, delivery speed, policy, and capital.
The biggest bottleneck is no longer customer demand. It is usable power, in the right markets, on a timeline that matches customer commitments.
Digital Realty’s land moves say a lot about the new game. Atlanta and Portland are not just expansion bets; they look like attempts to lock up future power positions before the best sites become impossible to secure.
The company is also becoming more capital-partner-driven. The $3.25 billion U.S. hyperscale fund and the Blackstone joint venture suggest Digital Realty wants to keep growing without carrying the whole development burden alone.
That capital strategy helps, but it creates a sharper shareholder question. Digital Realty is still issuing equity, and today that looks like growth funding rather than distress, but dilution remains a real cost.
Customer concentration is worth watching, though it is not a red flag yet. The largest customer is about 11% of revenue, and very large AI leases can make timing and delivery risk more visible even when the customer base is broad.
Compared with Equinix, Digital Realty is not falling behind. Equinix still looks stronger in premium interconnection and margin quality, while Digital Realty looks more exposed to the capital-heavy scale-and-capacity layer of the AI data-center cycle.
So the answer is fairly clear: Digital Realty is in a strong position, but the next phase will be won through physical execution, power access, construction delivery, and backlog conversion, not just better AI messaging.
This market map, featured in our data center market deck, highlights top companies and startups in the data center market
Is Digital Realty still getting customers these days?
Yes, Digital Realty is still getting customers, and the recent data says this is more than one big hyperscaler carrying the quarter.
In Q1 2026, Digital Realty signed $707 million of annualized GAAP rent at 100% share, or $423 million at its share. That is the headline number, but the more useful signal is underneath it: the company added 116 new customer logos and posted a record quarter in the 0–1 MW plus interconnection category. That matters because smaller and connectivity-heavy deals usually show broader market demand, not just one giant AI campus deal.
We also saw the same pattern in the product mix. Digital Realty reported $98 million of bookings in the 0–1 MW plus interconnection category, up 42% year over year. In other words, the demand is not only coming from the loudest part of the AI market but also from customers that need smaller footprints, more network access, and more distributed infrastructure.
So, yes, Digital Realty still has real customer momentum. The recent quarter looks like a broad demand quarter, not just a lucky hyperscale quarter.
Is AI actually turning into money for Digital Realty now?
Digital Realty is clearly turning AI into money now, but the useful point is that AI is showing up in two different ways.
The first one is obvious: Digital Realty signed the largest megawatt lease in its history in Q1 2026, tied to hyperscale AI demand. Some industry coverage described it as a roughly 200 MW AI lease in Charlotte. Even if we avoid over-reading the customer name, the scale tells us something: this is not a lab experiment or a press-release partnership but rather a very large infrastructure commitment.
The second signal is more interesting. Digital Realty said 21% of its 0–1 MW bookings were AI-oriented requirements. That is where the story gets better. It suggests AI is also starting to appear in smaller, distributed, enterprise-style deployments.
Then there is the product evidence. In February 2026, Digital Realty expanded its Innovation Lab network to Singapore, Japan, and London. The Japan lab is tied to high-density AI workloads and liquid cooling. The London lab is about giving customers a real environment to test AI and hybrid-cloud architectures before rollout.
AI is not just helping Digital Realty’s marketing. It is showing up in signed leases, smaller deployment demand, and the way the company is designing its infrastructure.
If you want more recent data on this point, please see our latest data center market report.
As this chart shows, and as featured in our data center market deck, search interest in data centers has increased significantly
Is Digital Realty’s backlog actually good news now?
Digital Realty’s backlog is good news, but it also tells us exactly where the next risk sits.
The company ended Q1 2026 with $1.8 billion of signed-but-not-started annualized rent at 100% share, including $1.0 billion at Digital Realty’s share. That is a lot of future revenue already contracted. It also pushed management to talk about visibility into 2027 and 2028, which is a strong signal for a REIT where investors care about predictable cash flow.
But the timing matters. Digital Realty said the weighted-average lag between signing and contractual start was 19 months. That means a large part of the good news is real, but it is still waiting for buildings, power, customer equipment, and fit-outs to be ready.
The comparison is useful here. Digital Realty had $423 million of new bookings at its share in Q1, while commencements were $204 million. That gap is good because the backlog is growing. It also means the company is stacking more execution work into the next few years.
Is Digital Realty getting better pricing these days?
Digital Realty is getting better pricing now, and this is one of the cleaner signs that the market is still tight.
In Q1 2026, renewal lease rates were up 5.0% on a cash basis and 6.3% on a GAAP basis. That is already a decent number for a data-center landlord, but the stronger signal is that management raised its 2026 cash renewal-spread outlook to 6.5%–8.5%. Companies usually do not raise this kind of outlook unless they are seeing enough recent deal evidence to support it.
The market backdrop helps explain why. CBRE’s 2026 outlook says demand is surging while delivery has become the constraint. JLL expects the global data-center sector to grow at a 14% CAGR through 2030, with energy constraints becoming a major limiter. Cushman & Wakefield describes 2026 as a market of “managed growth,” where power, policy, and capital decide which sites actually get built.
This is why the pricing signal matters. Digital Realty is repricing capacity that customers need now and that competitors cannot instantly replace.
So, Digital Realty has pricing power again.
This chart, featured in our data center market deck, illustrates yearly venture capital funding for data center startups
Is power becoming Digital Realty’s biggest problem now?
Power is probably Digital Realty’s biggest practical problem now, even though it is also one of its biggest advantages.
Management has been very direct about power availability, labor, supply-chain issues, and community concerns slowing the market. That lines up with the broader industry: recent reports keep pointing to grid delays, moratoriums, rising electricity worries, water concerns, and local pushback as the main brake on new data-center growth.
Digital Realty’s own moves show it understands the game has changed. In Q1 2026, the company bought an 873-acre Atlanta-area parcel that could support more than 1 GW of IT capacity, and it also bought land in Portland that could support 160 MW. Those are not normal “nice to have” land additions. They look like a race to secure large future power positions before the easiest sites are gone.
There is also a warning signal close to home. Industry coverage has pointed to nearly 100 MW of data-center capacity in Silicon Valley sitting idle because local power infrastructure cannot keep up, including a 48 MW Digital Realty facility.
That is exactly the kind of issue investors should care about: the building can exist, the demand can exist, and the revenue can still be delayed if the power is not there.
So Digital Realty’s biggest bottleneck today is getting enough usable power, in enough markets, fast enough.
If you want more recent data on this point, please see our latest data center market report.
Is Digital Realty becoming more dependent on outside capital now?
Digital Realty is becoming much more serious about outside capital, and that is probably the right move for this phase of the market.
In March 2026, Digital Realty closed a $3.25 billion U.S. hyperscale data-center fund. The structure is important: Digital Realty keeps 20% ownership and manages operations, leasing, asset management, development, and financing. That lets it stay close to the customer and the asset, while letting institutional capital carry a large part of the development burden.
This is not a one-off move. Digital Realty had already worked with Blackstone on a $7 billion hyperscale development joint venture, covering around 500 MW of capacity across major markets. The company also said it expanded its Strategic Private Capital team in 2026, which is a small but useful weak signal: it is staffing for a world where funding capacity matters almost as much as building capacity.
The reason this matters is simple. Digital Realty had around 1.2 GW under construction in Q1 2026, and 61% of that was pre-leased. That is a huge pipeline, and it needs a lot of capital before it becomes rent.
So it looks like Digital Realty is building a bigger capital engine around the data-center boom.
That should help growth, but it also means investors need to watch how much upside stays with Digital Realty versus its capital partners.
This chart, featured in our data center market deck, shows how Equinix is capturing share in data centers
Is Digital Realty diluting shareholders lately?
Yes, Digital Realty is still using equity, and shareholders should treat that as a real cost of the growth story.
The Q1 2026 filing shows Digital Realty raised about $875 million through its ATM program during the quarter, from roughly 4.9 million shares. It then raised another $435 million after quarter-end. That is not a small detail. When a company issues that much equity, the growth story has to be strong enough to justify the dilution.
The good news is that this does not look like distress dilution. Digital Realty ended Q1 with net debt-to-adjusted EBITDA around 4.7x, large revolver capacity, and most of its debt fixed-rate or swapped. That makes the equity issuance easier to understand: the company is funding a massive development cycle while trying not to over-lever the balance sheet.
The stock also shows investors are willing to accept the trade-off for now. Digital Realty was trading around $187 in mid-June 2026, with a market cap around $66 billion, and several analysts raised price targets after Q1 because bookings, guidance, and AI demand improved.
So, yes, Digital Realty is diluting shareholders. But today it looks more like expensive growth funding than balance-sheet repair.
If you want more recent data on this point, please see our latest data center market report.
Is Digital Realty picking the right markets recently?
Digital Realty’s recent market moves look more thought-through than a simple “add more data centers everywhere” strategy.
Barcelona is a good example. In May 2026, Digital Realty opened BCN1, a 14 MW planned facility near Mediterranean connectivity routes that link Europe, North Africa, the Middle East, Asia, and the Americas. That is useful because Barcelona is not just a local demand story; it is also a network-route story.
Sofia is another interesting signal. In March 2026, Digital Realty entered Bulgaria by acquiring Telepoint, giving it a presence in a Southeast European interconnection hub with more than 110 network service providers. That is not the same as buying a giant AI campus in Northern Virginia. It is a smaller, connectivity-led bet.
Then the land side tells a different part of the story. Atlanta and Portland are more about future scale and power. Malaysia, Milan, Portugal, Singapore, Japan, and London add regional density or product depth. Put together, these moves suggest Digital Realty is trying to own both sides of the AI infrastructure map: big powered campuses and smaller connected nodes.
This chart, featured in our data center market deck, illustrates yearly funding for data center startups
Is Digital Realty too dependent on a few giant customers now?
Digital Realty has some concentration risk, but it does not look scary yet.
The latest filing says Digital Realty’s largest customer accounts for about 11% of total revenue, and no other single customer is above 10%. That is meaningful. A customer at 11% can affect negotiations, timing, and future design decisions. But it is not the kind of single-customer exposure that breaks the story by itself.
The rest of the customer base helps. Digital Realty says it serves more than 5,500 customers across more than 300 data centers and 55-plus metros. The company also has around 234,000 cross-connects, which matters because interconnection businesses tend to be stickier than simple wholesale capacity.
The real issue is subtler. AI can make concentration look safer than it is. One giant lease improves backlog and visibility, but it can also make delivery timing more binary. If a major hyperscale customer changes scope, delays equipment, or pushes design changes, Digital Realty can feel that in a very visible way.
So the customer base is not a red flag today. It is a yellow light that gets more important as hyperscale AI leases get larger.
Is Digital Realty facing a hidden legal or short-seller issue now?
We do not see a big hidden legal or short-seller issue around Digital Realty right now.
The Q1 2026 filing says Digital Realty was not involved in legal proceedings that it believed would have a material adverse effect on the business or financial position. That is a boring sentence, but it is useful for this exercise because it gives us a clean check on obvious litigation risk.
Short interest also looks modest. As of late May 2026, short interest was around 7.3 million shares, or about 2.1% of the public float, with less than four days to cover.
The analyst picture is mixed, but not alarming. Bank of America downgraded the stock in January 2026, arguing that large data-center operators could trade more like bond proxies. After Q1, UBS and Goldman raised targets, pointing to AI-driven demand, bookings, interconnection, and guidance. That split is useful: the bear case is more about valuation and interest-rate sensitivity than fraud, litigation, or demand collapse.
So, Digital Realty’s worries are normal-but-serious operating worries, not scandal worries.
If you want more recent data on this point, please see our latest data center market report.
This chart, featured in our data center market deck, compares the main business model options for hyperscale data center operators
Is sustainability actually helping Digital Realty now?
Sustainability is starting to matter commercially for Digital Realty because data centers are becoming politically harder to build.
In May 2026, Digital Realty said it reached 93% global renewable-energy coverage in 2025, up 18 percentage points year over year. It also said 205 sites were matched with 100% renewable or emissions-free energy, and that it had 1.7 GW of contracted renewable-energy capacity. Those numbers are useful because the data-center debate is increasingly about power bills, emissions, water, and local impact.
The efficiency signals are also worth keeping. Digital Realty reported global PUE of 1.38 and EMEA PUE of 1.31. It also said water use rose only 3% from 2023 to 2025 while the portfolio grew 34%. That does not make data centers impact-free, but it gives Digital Realty better arguments when customers, regulators, and communities push back.
Recent site-level choices point in the same direction. BCN1 in Barcelona was designed with advanced power and cooling, renewable-energy procurement, and HVO100 backup generators. The Imperial College project in the UK used direct liquid cooling for AI workloads, which is exactly the kind of thing customers want when they need higher rack density without pretending energy use does not matter.
Is Digital Realty keeping up with Equinix these days?
Digital Realty is keeping up with Equinix on AI demand, but the two companies still feel different.
Equinix had a strong Q1 2026 too. It raised its full-year outlook, talked about double-digit recurring revenue growth, and highlighted strong demand for AI, cloud, and networking. That matters because Equinix is the cleanest comparison point for Digital Realty: if Equinix were strong and Digital Realty were weak, that would tell us Digital Realty had a company-specific problem. We do not see that.
Where Digital Realty looks stronger is hyperscale capacity and backlog momentum. Its record bookings, largest megawatt lease, huge signed-not-started backlog, and private-capital fund all point to a company leaning hard into large AI infrastructure demand.
Where Equinix still looks harder to beat is premium interconnection and margin quality. Equinix sounds more like the enterprise-dense, high-margin AI networking layer. Digital Realty sounds more like the scale-and-capacity layer that wins when customers need a lot of powered space.
So Digital Realty is not falling behind Equinix. It is just playing a more capital-heavy version of the same AI infrastructure cycle.
This chart, featured in our data center market deck, shows the revenue mix across customer segments in the data center market
So, how is Digital Realty doing these days?
Digital Realty is doing well right now. The recent signals are too strong to call this just an AI narrative: record leasing in key categories, a huge backlog, raised guidance, stronger renewal pricing, new AI-oriented product moves, and a bigger private-capital strategy.
The company’s main risk has changed. Demand is not the weak point today. The weak points are power delivery, construction timing, local resistance, dilution, and backlog conversion. That is a better problem than weak customer demand, but it is still a real problem.
Everything considered, Digital Realty looks like one of the clearer winners of the AI data-center cycle. The catch is that the next phase will reward companies that can execute physically, not companies that can tell the best AI story.
If you want more recent data on this point, please see our latest data center market report.
| Question | Check / answer | Signals behind the answer |
|---|---|---|
| Is Digital Realty still getting customers? | Yes. Recent demand looks broad, not just one giant deal. | $707M Q1 bookings; 116 new logos; record 0–1 MW plus interconnection bookings; $98M category bookings up 42% YoY. |
| Is AI turning into money for Digital Realty? | Yes. AI is showing up in leases, smaller deployments, and infrastructure design. | Largest megawatt lease in company history; reported 200 MW AI lease coverage; 21% AI-oriented 0–1 MW bookings; Innovation Labs expanded to Singapore, Japan, London. |
| Is Digital Realty’s backlog good news? | Yes, but it now creates a delivery test. | $1.8B signed-not-started rent; $1.0B at DLR share; 19-month weighted-average signing-to-start lag; bookings exceeded commencements. |
| Is Digital Realty getting better pricing? | Yes. Scarcity is helping renewal economics. | 5.0% cash renewal uplift; 6.3% GAAP renewal uplift; raised 2026 cash renewal-spread outlook; CBRE/JLL/Cushman point to power-constrained supply. |
| Is power Digital Realty’s biggest problem? | Yes. Power is now the key bottleneck. | Management flagged power and community constraints; Atlanta land could support 1 GW; Portland land could support 160 MW; Silicon Valley power delays show the revenue risk. |
| Is Digital Realty more dependent on outside capital? | Yes, and that is becoming central to the model. | $3.25B U.S. hyperscale fund; 20% retained stake; Blackstone $7B JV; Strategic Private Capital team expansion; 1.2 GW under construction. |
| Is Digital Realty diluting shareholders? | Yes, but it looks like growth funding. | $875M ATM proceeds in Q1; $435M after quarter-end; 4.7x net debt-to-adjusted EBITDA; analysts raised targets after Q1. |
| Is Digital Realty picking the right markets? | Yes. The recent map looks intentional. | BCN1 in Barcelona; Sofia/Telepoint acquisition; Atlanta and Portland land; Innovation Labs in Singapore, Japan, London; expansion around Mediterranean/APAC corridors. |
| Is customer concentration a problem? | Not yet, but it is worth watching. | Largest customer around 11% of revenue; no other customer above 10%; 5,500+ customers; 234,000 cross-connects; very large AI leases increase timing exposure. |
| Is there a hidden legal or short issue? | No clear sign of that today. | No material legal proceedings disclosed; short interest around 2.1% of float; bear case centers on valuation/rates, not scandal. |
| Is sustainability helping Digital Realty? | Yes. It now helps with customers, permits, and politics. | 93% renewable-energy coverage; 205 sites matched with emissions-free power; 1.38 global PUE; water use up 3% while portfolio grew 34%; liquid-cooling projects. |
| Is Digital Realty keeping up with Equinix? | Yes on AI demand, though Equinix still feels stronger in premium interconnection. | Digital Realty record bookings/backlog; Equinix raised Q1 2026 outlook; both point to AI/cloud/networking demand; DLR is more hyperscale-capacity-heavy. |
This chart, featured in our data center market deck, shows how hyperscale AI-ready campus technology has evolved over time
OUR METHODOLOGY
The main question behind this page is not something we think should be answered by intuition, market reputation, or a simple AI narrative. Digital Realty sits at the intersection of several moving pieces: customer demand, AI infrastructure, power availability, backlog conversion, pricing, capital intensity, dilution, sustainability, and peer competition.
So we broke the question into the analytical dimensions that seemed most relevant to Digital Realty’s current situation. For each one, we looked at recent signals, gave priority to first-hand company disclosures and fresh industry data, and then aggregated the evidence before reaching a conclusion.
We gave more weight to signed leases, bookings, backlog, renewal spreads, disclosed financing activity, development capacity, power constraints, and peer results than to broad narratives or market sentiment.
The goal was to separate what is already visible in the data from what still depends on execution. That is why the analysis treats demand and AI monetization as strong today, while still paying close attention to power delivery, construction timing, capital structure, and backlog conversion.
We are independent from Digital Realty. We are not affiliated with the company, do not own shares in it, and have not been paid by the company to write this analysis. This page is written for research and editorial purposes only. It is not investment advice, and it should not be read as a recommendation to buy, sell, or hold Digital Realty stock.
Key sources used for this analysis include: Digital Realty’s Q1 2026 results, Digital Realty’s Q1 2026 supplemental operating data, Digital Realty’s Q1 2026 Form 10-Q, SEC company filings for Digital Realty, Digital Realty’s Q1 2026 earnings-call transcript, Digital Realty’s Innovation Lab expansion announcement, Digital Realty’s U.S. hyperscale data-center fund announcement, Blackstone and Digital Realty’s hyperscale development joint venture announcement, Digital Realty’s Barcelona BCN1 opening announcement, Digital Realty’s Barcelona metro information, Digital Realty’s Telepoint / Bulgaria acquisition announcement, Digital Realty’s 2025 Impact Report announcement, Digital Realty’s sustainability information, CBRE’s 2026 U.S. data-center outlook, JLL’s 2026 global data-center outlook, Cushman & Wakefield’s 2026 global data-center market comparison, Equinix’s Q1 2026 results and raised outlook, and Data Center Dynamics on Silicon Valley data centers awaiting power connections.
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