Rising Revenue Expectations from Digital Realty!

Digital Realty Trust has raised its annual funds from operations and revenue forecasts, anticipating that demand for data center services will increase due to the boom in artificial intelligence.

The company has seen a significant increase in demand as more corporate clients upgrade their IT infrastructure and outsource their needs, along with advancements in AI technology.

Large-scale cloud service providers, known as hyperscalers, are in a race to build artificial intelligence infrastructure. Amazon, Meta, Alphabet, and Microsoft are expected to spend over $360 billion by 2025.

Most of the investments will be directed towards enhancing data centers. This rising demand will accelerate Digital Realty's leasing activities, contributing to revenue growth.

The company rents managed data centers to clients in various sectors, including cloud and information technology, social networking, communications, and manufacturing.

Digital Realty announced a strategic partnership with Dell Technologies and DXC at the beginning of October, aimed at delivering AI directly to customers' data through a combination of applicable use cases and expert-led implementations with end-to-end management.

Texas-based Digital Realty expects its annual funds from operations per share to be in the range of $7.32 to $7.38; this is an increase from its previous forecast range of $7.15 to $7.25. The company's annual revenue expectation is between $6.03 billion and $6.08 billion; this also reflects an improvement from its previous forecast of $5.93 billion to $6.03 billion.

For the third quarter ending September 30, Digital Realty reported $1.58 billion in revenue, surpassing the $1.53 billion estimates. The funds from operations for the quarter came in at $1.89 per share, showing an increase compared to last year's $1.67.