Key Stats for Digital Realty Trust Stock
- 52-Week Range: $144 to $196
- Current Price: $196
- Street Mean Target: $201
- Street High Target: $223
- TIKR Model Target (Dec. 2030): $276
What Happened?
Digital Realty Trust stock (DLR) represents a bet on the company that owns and operates more than 300 data centers across 55+ global metro markets, and the FY2025 numbers made that bet look underpriced: operating income reached $0.89 billion, up 39.8% year over year.
The Q4 2025 core FFO (funds from operations, the REIT equivalent of operating cash earnings) of $1.86 per share beat the consensus estimate of $1.58 and rose 7.5% from the same quarter a year earlier.
Total bookings for the full year hit $1.2 billion at 100% share, the second consecutive year above that threshold and nearly 70% above the five-year average that preceded it.
Jordan Sadler, Senior Vice President of Public and Private Investor Relations, stated on the Q4 2025 earnings call that “our initial guidance for 2026 implies nearly 8% bottom line per share growth at the midpoint despite outperforming our original 2025 guidance by almost 500 basis points,” placing the acceleration in the context of a trend rather than a one-quarter event.
The $3.3 billion inaugural hyperscale fund closed with LP equity commitments above the original target, DLR entered six new markets including Malaysia, Portugal, Bulgaria, and Italy, and the company ended the year with a record $1.4 billion backlog in annualized GAAP rent, providing forward revenue visibility into 2027.
Land acquisitions in Milan — two parcels capable of scaling to 84 MW of IT capacity — and Bloomberg reporting around $2.3 billion in planned Italy data center investment confirm that the European expansion is no longer a slide in an investor deck but capital already committed.
Wall Street’s Take on DLR Stock
Record bookings and a strong FFO beat tell part of the story; what the market has not fully repriced is the operating leverage now embedded in DLR’s cost structure, where surging commencement volumes are beginning to outpace the fixed cost base the company has been building for years.
DLR’s EBIT reached $0.66 billion in FY25, up 39.6% year over year, and consensus now projects EBIT of around $1.11 billion for FY26 — roughly 68% growth — as the $634 million of leases scheduled to commence throughout the year convert from backlog to recognized revenue.
Twenty-five of 32 covering analysts currently rate Digital Realty stock a buy or outperform, with a mean price target of around $201 against the April 14 close of $195.79, and Wall Street is specifically watching whether the record 0-to-1-megawatt booking pace from Q4 2025 sustains into the first half of 2026.
The bull target of $223 and the bear floor of $170 reflect a real debate: bulls price in double-digit stabilized development yields on the $10 billion pipeline under construction, while bears argue that CapEx guided between $3.25 billion and $3.75 billion in FY26 (net of partner contributions) will keep FCF negative through at least FY27.
Carrying roughly 1.33x consensus net asset value (NAV) against a historical range closer to 1.08x to 1.24x across the prior four quarters, Digital Realty stock appears undervalued relative to the EBIT inflection the market is still treating as a one-year event, with consensus projecting around 68% EBIT growth in FY26 on the back of a record $1.4 billion backlog.
Power availability across Northern Virginia, Singapore, and EMEA is the single variable that breaks the model: if utility constraints delay the 300 MW of capacity targeted for delivery between 2027 and 2029, the commencement schedule slips and the EBIT trajectory compresses.
The April 23 Q1 2026 earnings release is the first hard data point on whether the $634 million of scheduled commencements are tracking on pace — watch 0-to-1-megawatt booking volume and any guidance revision as the key numbers.
Digital Realty Trust Stock Financials
Digital Realty’s total revenues reached $6.08 billion in FY25, up 11.9% from $5.43 billion in FY24, reversing the 0.2% contraction posted the prior year and marking the sharpest revenue growth rate the income statement has produced in four fiscal years.
The operating leverage is visible in the margin line: operating income expanded from $0.64 billion in FY24 to $0.89 billion in FY25, lifting operating margins from 11.7% to 14.6%, even as total operating expenses climbed 8.1% over the same period to $5.19 billion.
Property management fee income, the recurring revenue generated from DLR’s private capital fund strategy, grew from $0.07 billion in FY24 to $0.14 billion in FY25, and its continued scaling represents a margin-accretive revenue stream that does not require incremental owned capital to grow.
The one tension the income statement surfaces is the gap between operating margin expansion and total expense growth: if development CapEx guided at $3.25 billion to $3.75 billion for FY26 pushes property and operating costs above their current trajectory, the margin recovery that is only one year old faces its first real stress test.
What Does the Valuation Model Say?
The TIKR mid-case model, built on roughly 10% revenue CAGR and 14% EPS CAGR from 2025 through 2030, arrives at a target of around $276, implying 41% total return from today’s price, driven by the assumption that DLR’s $10 billion development pipeline at projected 11.9% stabilized yields converts to recognized revenue on the commencement schedule management has guided.
With the low case still generating around 52% total return to 2030 and the mid-case annualized return running at around 8% per year, Digital Realty stock is undervalued at current levels for investors pricing in a data center REIT; the mid-case EPS CAGR of roughly 14% is being valued at a NAV multiple that still reflects the slower-growth REIT identity the company has been actively shedding.
The Scenario Breakdown
The entire investment case for Digital Realty stock hinges on one question: does the record $1.4 billion backlog commencing into FY26 and FY27 convert on the schedule management has guided, or do power and construction constraints push those commencements and the EBIT inflection into years the current price does not reflect?
What Has to Go Right
- The $634 million of leases scheduled to commence in FY26 convert on pace, supporting EBIT consensus of around $1.11 billion and the roughly 68% growth assumption embedded in estimates
- 0-to-1-megawatt bookings sustain the Q4 2025 record of $96 million per quarter, where that figure was already 7% above the prior record set in Q2 2025
- Cash renewal spreads hold in the guided 6% to 8% range; the greater-than-1-megawatt portfolio delivered 8.1% cash re-leasing spread in Q4 2025, which must repeat for the same-store growth model to track
- Fee income from the $3.3 billion hyperscale fund continues scaling, improving operating margins without requiring additional owned development capital
What Could Go Wrong
- Development CapEx rising to $3.25 billion to $3.75 billion net of partner contributions in FY26 (up from $3.0 billion in FY25) keeps FCF deeply negative and limits balance sheet optionality if the leasing environment softens
- The 160-basis-point interest cost headwind from the November Eurobond refinancing is already embedded in the 8% FFO guidance midpoint, leaving no buffer for additional financing cost surprises
- Power transmission delays in Northern Virginia, where 300 MW is targeted for delivery between 2027 and 2029 but availability is described by management as “very limited,” could push commencement timing into FY28 and defer the EBIT recovery
- The current 1.33x NAV multiple offers limited downside protection: a miss on Q1 2026 commencements on April 23 could compress the multiple back toward the 1.08x trough seen four quarters ago, implying roughly 19% downside to the $170 bear analyst target
Should You Invest in Digital Realty Trust, Inc.?
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