Erik Isakson/DigitalVision via Getty Images Summary In our initial report on Digital Realty (NYSE:DLR), we rated the shares a Hold on valuation. We believed they were "too expensive to consider a Buy", though we acknowledged that the near-term fundamentals of the DC market were too strong to allow significant underperformance. We have updated our valuation for the recent earnings release, which saw record leasing activity and favorable pricing trends. Despite the strong quarter, and continued strength of th ...

Digital Realty Trust, Inc. (NYSE:DLR) Nareit REIT Week: 2024 Investor Conference June 4, 2024 8:45 AM ET Company Participants Andrew Power - President and CEO Matthew Mercier - CFO Conference Call Participants Matthew Niknam - Deutsche Bank Matthew Niknam Okay, everybody can go ahead and please take their seats, we're going to go ahead and get started with what I believe is the first session of the day. I'm Matt Niknam, Common Infrastructure Analyst here at Deutsche Bank, for those who don't know me. We're ...

Digital Realty Trust, Inc. (NYSE:DLR) Nareit REIT Week: 2024 Investor Conference June 4, 2024 8:45 AM ET Company Participants Andrew Power - President and CEO Matthew Mercier - CFO Conference Call Participants Matthew Niknam - Deutsche Bank Matthew Niknam Okay, everybody can go ahead and please take their seats, we're going to go ahead and get started with what I believe is the first session of the day. I'm Matt Niknam, Common Infrastructure Analyst here at Deutsche Bank, for those who don't know me. We're ...

Industry Insights - The demand for electricity is projected to double by 2030 due to the explosive growth of artificial intelligence, with AI tasks requiring approximately ten times the electricity of traditional internet searches [1] - The World Economic Forum indicates that achieving a tenfold improvement in AI model efficiency could lead to a surge in computational power demand by up to 10,000 times, with AI's energy consumption growing at an annual rate of 26% to 36% [1] - By 2028, AI could consume more power than Iceland did in 2021, highlighting the significant energy requirements associated with AI advancements [1] Company Highlights - Digital Realty Trust (DLR) is positioned to benefit from the AI boom, with a yield of 3.36% and a projected 15% CAGR in data center demand through 2030 according to Goldman Sachs [3] - AES, a Virginia-based utility, forecasts that data centers could account for up to 7.5% of total U.S. electricity consumption by 2030 [4] - First Solar (FSLR) has seen its shares rise from approximately $180 to a high of $286.60, with analysts from UBS and Piper Sandler reiterating buy ratings and raising price targets due to its direct benefits from AI's energy demands [5][6] - Enbridge (ENB) is expected to see increased demand for power generation from AI and data centers, with a current yield of 7.33% and a target price of $40 per share [6][7]

Core Viewpoint - There are several underappreciated stocks in the market, including Viking Therapeutics (VKTX), NewLake Capital Partners (NLCP), Digital Realty Trust (DLR), and SoundHound AI (SOUN), which present potential investment opportunities as their true value is not yet recognized by the market [1][2][3]. Group 1: Viking Therapeutics (VKTX) - VKTX was highlighted at a price of $22 per share in June 2023, nearing Phase 2 trials, with Phase 1 showing promising results for weight loss [1]. - The stock has risen to $63.81, with a high of nearly $100, yet it remains underappreciated despite favorable Phase 2 results [2]. - Long-term projections suggest VKTX could exceed $100 per share [3]. Group 2: NewLake Capital Partners (NLCP) - NLCP is a real estate investment trust (REIT) focused on the cannabis industry, currently yielding 8.55% [4]. - The REIT owns 31 properties, including 14 cultivation facilities and 17 dispensaries, with Q1 funds from operations (FFO) at $0.50, beating estimates, and revenue of $12.6 million, up 10.5% year-over-year [5]. - The cannabis industry is expected to grow, especially with potential regulatory changes, making NLCP a buy opportunity [6]. Group 3: Digital Realty Trust (DLR) - DLR is another underappreciated REIT with a yield of 3.45%, essential for the digital infrastructure, particularly with the rise of artificial intelligence [7]. - Data center demand is projected to grow at a 15% CAGR until 2030, indicating strong future prospects [8]. - Current stock price is $141.40, with an initial target of $150 [9]. Group 4: SoundHound AI (SOUN) - SOUN is trading at $4.70 and provides voice control and audio analytics software, backed by significant investments from Nvidia and SoftBank [10]. - Analysts at Wedbush have highlighted SOUN's strong position in the AI sector, giving it an outperform rating with a price target of $9 [11]. - The stock aims to retest a previous high of $10.25 [12].

Core Viewpoint - Digital Realty Trust, Inc. (DLR) is expected to maintain profitability in FY2024, with a robust investment thesis supported by strategic growth initiatives and improved financial metrics [2][3][11]. Financial Performance - DLR reported total operating revenues of $1.33 billion in FQ1'24, reflecting a 2.2% decrease quarter-over-quarter but inline year-over-year, while AFFO per share increased by 29.2% quarter-over-quarter and 7.6% year-over-year to $1.68 [5]. - The REIT achieved record leasing levels, with pricing averaging $264 per square foot, a 59% increase quarter-over-quarter and 56.2% year-over-year [6]. - DLR's multi-year backlog reached $541 million, up 21.3% quarter-over-quarter and 24.6% year-over-year, indicating strong demand and visibility for future revenue [7]. Growth Drivers - The management's intensified Joint Ventures and strategic funding plans have contributed to a healthier balance sheet, with a net-debt-to-EBITDA ratio improving to 5.8x from 6.2x in FQ4'23 and 7.1x in FQ1'23 [9][10]. - FY2024 guidance has been raised, with rental rates on a renewal basis expected to increase by 6% year-over-year and Same-Capital cash NOI growth projected at 3% year-over-year [8]. Dividend Outlook - The AFFO payout ratio improved to 72.8% in FQ1'24, down from 76.6% in FQ4'19, suggesting potential for a dividend increase in 2025 [10][11]. - The consensus estimates indicate a dividend per share increase from $4.90 in FY2024 to $5.03 in FY2025, reflecting a 2.7% growth [12]. Valuation Metrics - DLR's forward Price/AFFO valuation stands at 22.89x, compared to sector median valuations, indicating it remains reasonably valued despite a premium [14][15]. - The REIT's forward dividend yield is 3.42%, lower than the sector median of 4.75%, but still offers decent returns [21]. Market Sentiment - DLR has traded sideways in 2024 amid mixed market sentiments, with inflation concerns and high borrowing costs impacting investor outlook [20]. - Despite these challenges, the stock is trading near fair value estimates, with an upside potential of 18.5% to a long-term price target of $169.30 based on FY2026 AFFO per share estimates [21].

Group 1 - Digital Realty Trust (DLR) has introduced innovative liquid-to-chip cooling technology to address challenges in high-density workloads, particularly in AI and data-intensive applications [1][2] - The new direct liquid cooling (DLC) offering enhances flexibility for businesses to deploy high-density configurations in proximity to cloud and AI service providers [2][4] - The Private AI Exchange launched by Digital Realty provides new data exchange options that complement the DLC solutions [3] Group 2 - Digital Realty's advanced deployment support can manage power densities from 30 to 150 kilowatts per rack, utilizing solutions like rear door heat exchangers (RDHx) and DLC [4] - The company aims to expand its high-density colocation offerings across more data centers globally to meet the rising demands of AI [5] - The demand for high-performing data centers is expected to grow due to trends in cloud computing, IoT, and big data [6] Group 3 - The growth in AI, autonomous vehicles, and virtual/augmented reality markets is anticipated to accelerate over the next five to six years, positioning DLR's data center portfolio for long-term growth [7] - Over the past three months, DLR's shares have increased by 6.2%, contrasting with a 1% decline in the industry [7]

Solution available in 170 Digital Realty data centers globally AUSTIN, Texas, May 15, 2024 /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation, and interconnection solutions, today announced the availability of groundbreaking liquid-to-chip cooling technology, the next evolution in high-density deployment support. This innovative advancement represents a significant leap forward in addressing the evolving challenges of managing high-d ...

FangXiaNuo Digital Realty (NYSE:DLR) brings companies and data together by delivering the full spectrum of data center, colocation, and interconnection solutions. We have started coverage of DLR back in August 2023, with an initial neutral rating. Our first article, titled the Pros and Cons of Investing in Digital Realty Trust, highlighted on one hand that the firm has outperformed the broader REIT market in the past decade and that it has been committed to return value to its shareholders in the form of di ...

AUSTIN, Texas, May 8, 2024 /PRNewswire/ -- Digital Realty (NYSE: DLR), the largest global provider of cloud- and carrier-neutral data center, colocation and interconnection solutions, announced today it has priced an underwritten registered public offering of 10,500,000 shares of its common stock for expected gross proceeds of approximately $1,470 million. BofA Securities, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are acting as joint-bookrunning managers for the public offering.   As part ...