KeyBanc Capital Markets reiterated a Sector Weight rating on Digital Realty Trust (NYSE: DLR), which is trading at $163.21 and carries a price-to-earnings ratio of 40.79, according to a research note released Thursday. While KeyBanc described the near-term setup as constructive, the firm concluded the balance between potential upside and downside remains neutral and therefore maintained its rating.
KeyBancs analysis highlights an expectation that Digital Realtys 2026 guidance will call for roughly 10%+ revenue growth and high-single to low-double-digit growth in core funds from operations (FFO) per share. The research note states both of these projected metrics sit above current consensus estimates. Those guidance expectations are presented as consistent with the companys recent and multi-year performance: Digital Realty delivered 8.67% revenue growth in the last twelve months and a five-year revenue compound annual growth rate of 11%.
Underpinning KeyBancs forecasts are a near-record backlog and development pipeline, and the firm specifically noted strength in the companys 0-1MW business segment. At the same time, KeyBanc pointed to underperformance in Digital Realtys larger >1MW business, calling this a material caveat and suggesting that investors seeking exposure to AI training infrastructure may find better-targeted alternatives.
Independent analyst consensus remains generally bullish: coverage shows a Buy recommendation on average with price targets spanning from $164 to $220. Several broker actions noted in the reporting reflect that optimism. Stifel reiterated its Buy rating with a $210 price target. HSBC upgraded the stock from Hold to Buy and raised its target to $193, citing expectations for strong and sustainable adjusted FFO per share growth. JPMorgan maintained an Overweight rating and a $210 price target, pointing to anticipated pricing improvements and new lease signings as key drivers.
Digital Realty has also continued to expand its footprint. The company announced the acquisition of TelcoHub 1 DC in Cyberjaya, Malaysia, marking its entry into the Malaysian market and expanding its presence in Southeast Asia. In another major strategic move, Digital Realty, in partnership with Reliance Industries and Brookfield Corporation, disclosed an $11 billion commitment in Andhra Pradesh, India, to establish one gigawatt of artificial intelligence data capacity.
The broader sector dynamics were highlighted by Jefferies commentary on robust data center demand, which referenced Oracles reported 133% quarter-over-quarter increase in non-commenced leases as an indicator of strong leasing activity across the market. Collectively, the developments cited by brokers and company actions point to ongoing strategic expansion and general optimism among analysts and investors about long-term demand for data center capacity.
Key considerations for investors in the short term are the contrast between Digital Realtys encouraging backlog and development pipeline and the underperformance in the >1MW segment that is most associated with AI training workloads. KeyBancs retained Sector Weight reflects that tension: growth prospects and dividend consistency are balanced against execution and segment-specific headwinds.
Company financial signals
- Overall financial health is rated "GOOD" by InvestingPro data.
- Digital Realty has paid dividends for 22 consecutive years and currently yields 2.99%.
Analyst landscape
- Consensus leans toward Buy, with price targets ranging from $164 to $220.
- Recent broker actions include Stifel reiteration (PT $210), HSBC upgrade to Buy (PT $193), and JPMorgan Overweight (PT $210).