Data Center Stocks Are Plunging -- Here's Why

Market Performance - The S&P 500 benchmark index was down by about 1.7% at 11 a.m. ET, while the Vanguard Real Estate ETF (VNQ) was slightly higher by 0.64% [1] - Data center REITs Equinix (EQIX) and Digital Realty Trust (DLR) were down by 7% and 12% respectively, and Iron Mountain (IRM) was down by more than 8% [2] AI and Data Center Industry - The AI boom has created a surge in demand for data centers, with U.S. tech giants investing billions in AI, particularly in data centers [4][5] - Equinix and Digital Realty are leaders in the data center REIT industry, with Equinix data centers often regarded as internet hubs [6] - Iron Mountain has been shifting its focus from paper records storage to digital records by building out data centers [6] Impact of DeepSeek's Announcement - DeepSeek's announcement of a large language model developed in two months at a cost of under $6 million has caused investors to question AI hardware and data center investments [3][7] - The news has led to a sell-off in data center REITs, but there is no evidence of tech companies pulling back on spending [7] - The announcement could also accelerate AI spending among tech giants, potentially benefiting data center REITs in the long term [8]