Digital Realty Trust, Inc. (DLR) Q1 2026 Earnings Call Transcript

The setup still looks like a capital-allocation story more than a near-term demand story. In datacenter REITs, the inflection usually comes from whether new supply can be financed and delivered fast enough to keep lease pricing elevated; that dynamic favors scaled incumbents because power, land, and interconnect density create a quasi-regional moat. The second-order winner is the broader AI infrastructure stack: if DLR can keep expansion disciplined, it preserves pricing power for GPU cloud operators and raises the hurdle rate for smaller colo operators trying to compete on footprint alone.

The key risk is that the market may be underestimating how quickly new supply can compress the scarcity premium in 12-24 months, even if near-term occupancy stays tight. Once capital markets reopen fully for private datacenter developers, lease-up risk shifts from "can they build?" to "can they maintain spreads?" That matters because REIT multiples tend to peak when investors extrapolate current scarcity into perpetuity, then rerate lower when delivery schedules get visible.

Contrarian angle: the more obvious trade is long the obvious AI enablers, but the cleaner expression may be to underweight the beneficiaries with the most duration sensitivity. If rates stay sticky, DLR’s equity acts like a long-duration bond plus growth optionality, which is vulnerable if the AI capex cycle pauses or power constraints slow take-up. A better risk/reward than outright long here may be relative value versus higher-beta AI hardware or power-infrastructure names that have clearer near-term earnings torque and less balance-sheet sensitivity.

Over the next 1-3 months, any guide-up on leasing or development pipeline should support the stock, but the stock likely needs proof that incremental growth is coming from signed demand rather than broader AI enthusiasm. Over 6-12 months, watch for a policy/power bottleneck or a private-market developer comeback; either can reverse the thesis even if headline demand remains strong.