stockrowWhat it does
Digital Realty is a real estate investment trust, or REIT, that owns, develops and operates data centers. It sells businesses the space, power, cooling and connections they need to house computing equipment and exchange data. Its customers include cloud and IT providers, communications companies, financial firms and businesses in other industries.
The company was founded in 2004 and is headquartered in Austin. Andrew P. Power is its president and chief executive officer. Digital Realty conducts its property business through an operating partnership controlled by the parent company.
Customers can rent anything from a single equipment cabinet to an entire data center hall. This arrangement, known as colocation, lets a customer place its own computing equipment in a facility operated by Digital Realty rather than build and run the whole site itself. For customers that want to build and operate more of their own infrastructure, Digital Realty also offers a physical location with power and network access.
Its PlatformDIGITAL business combines data center capacity with connections between customers, networks and cloud providers. A physical cross-connect links two endpoints within a facility; other services connect facilities in the same metropolitan area or let customers arrange connections across multiple locations. Digital Realty also provides engineering and operations support for its facilities.
How it makes money
Most of Digital Realty’s revenue comes from renting space in its data centers. Rental and other services revenue was $6.0 billion in FY2025, representing 97.6% of revenue. Fee income and other revenue was $143.8 million in FY2025. For Q3 2026, the company reported approximately $855 million of total bookings, including business owned with partners; bookings are not the same as revenue.
Customers contract for different combinations of space, power and connectivity. Smaller deployments can range from a cabinet to a larger group of cabinets, while larger deployments can occupy substantial customized areas. Digital Realty also charges for connections that allow customers to exchange data with other customers, service providers and networks. ServiceFabric lets customers arrange connectivity across Digital Realty locations and some third-party sites.
Contract terms vary by product. Contracts for deployments of 0 to 1 MW generally run for 2-5 years, while those for deployments above 1 MW generally run for 5-10+ years. At December 31, 2025, the average remaining lease term was approximately five years. Digital Realty also manages some properties held by unconsolidated entities in which it has invested and receives management fees for those services.
Many leases require tenants to reimburse all or part of property operating expenses and real estate taxes. Reimbursement terms vary, however, and some Turn-Key Flex leases do not provide reimbursement for certain operating expenses or taxes. Results also depend on occupancy and on the rates Digital Realty can obtain when leases expire or are renewed.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Rental and other services | $6.0 billion | 97.6% | 8.87% |
| Fee income and other | $143.8 million | 2.35% | 98.3% |
Customers and how it sells
Digital Realty serves cloud and IT service providers, digital content companies, network operators and enterprise customers. Its named customers include IBM, Oracle, JPMorgan Chase, Meta Platforms, AT&T and Comcast. A specialized salesforce serves global, enterprise and network customers, while existing customers also expand their use of the company’s facilities and services.
At December 31, 2025, the largest customer accounted for approximately 11.7% of the portfolio’s aggregate annualized recurring revenue. No other customer accounted for more than approximately 9.0%. Digital Realty reported more than 6,000 customers across its platform in Q3 2026.
The portfolio included 310 data centers at December 31, 2025, including 89 held as investments in unconsolidated entities. Of the total, 118 were in the United States and 113 in Europe, with the remainder in Latin America, Africa, Asia, Australia and Canada. United States revenue was $3.2 billion in FY2025, while revenue outside the United States was $2.9 billion.
Customers can use the platform for deployments in multiple regions, and Digital Realty offers connections within and between facilities. In Q3 2026, the company reported a network architecture deployment for an AI lab across 15 of its sites in EMEA.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| United States | $3.2 billion | 51.8% | 8.84% |
| Outside the United States | $2.9 billion | 48.2% | 11.4% |
Suppliers and costs
Digital Realty relies on utilities, equipment manufacturers, contractors and construction labor to build and operate its facilities. It has global purchasing agreements and relationships with major equipment manufacturers for components such as mechanical and electrical equipment. It also uses modular data center designs in its construction program.
Power is a significant operating expense because data centers require electricity for computing and cooling. Other property-level costs include taxes, insurance, maintenance, property management and rent on ground and building leases. The company also incurs administrative costs, depreciation and interest expense.
Many customer leases pass through some property expenses. In Q1 2026, Digital Realty reported that approximately 90% of its utility expense was reimbursed by customers. The company cautions that it may not be able to pass through every increase in energy costs. Development costs can also rise when materials, specialized components or skilled labor are scarce.
- Revenue$6.1B
- Cost of revenue−$2.7B
- Selling, general and administrative−$565.5M
- Other operating costs−$2.2B
- Operating income$658.5M
Competitive position
Digital Realty competes with other data center providers, including Equinix and NTT, as well as private operators in the United States. It also names Global Switch Holdings and regional operators in Europe, Asia, Latin America, Africa and Australia. Providers compete in some of the same metropolitan areas for customers seeking data center space and connectivity.
Digital Realty offers deployments ranging from individual cabinets to large customized facilities. Its platform combines locations in multiple countries with physical and virtual connections among customers, cloud providers and networks. The company also says that its purchasing agreements and construction processes help it secure equipment and shorten delivery times.
Our reading: The connected customer communities are a meaningful source of defensibility because a customer can reach networks and other businesses already present in a facility, although competing providers also offer data centers in overlapping markets.
Our reading: The global footprint can help Digital Realty serve customers in several regions under one provider, but the available evidence does not establish how much market share that advantage provides.
Our reading: Development capabilities and access to capital support its ability to deliver large projects, but construction, power availability and financing remain constraints for Digital Realty as well as the wider industry.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Equinix, Inc. | Data centers and connectivity in overlapping metropolitan areas | Medium |
| NTT | Data centers in overlapping metropolitan areas | Medium |
| Global Switch Holdings Limited | Data centers in international markets | Medium |
Growth opportunities
Digital Realty expects cloud services, hybrid cloud systems and artificial intelligence to remain significant drivers of demand for data center infrastructure. Its strategy includes developing space it already holds, acquiring land and properties, adding capacity at existing campuses and expanding its connectivity services.
At December 31, 2025, the company had 769 megawatts of projects underway across multiple metropolitan areas, and 64% of that activity was pre-leased. By the end of Q3 2026, Digital Realty reported a development pipeline of 1.5 gigawatts under construction at a total expected cost of $22 billion; it said the pipeline was 63% pre-leased. Pre-leasing represents customer commitments before capacity is delivered, while the remaining capacity still needs customers.
Digital Realty reported $2.5 billion of booked but not billed backlog at the end of Q3 2026, or $1.8 billion at its share. It expects lease commencements to accelerate over the following two quarters, including from newly signed smaller leases and upcoming pre-leased deliveries.
The company also uses partnerships and private capital to fund expansion. In Q3 2026, it completed the acquisition of Columbia Capital, a digital infrastructure investment platform, and entered Turkey through a development joint venture. It expects its private capital platform to play a role in financing hyperscale data centers over the long term.
- $4.4BFY2021
- $4.7BFY2022
- $5.5BFY2023
- $5.6BFY2024
- $6.1BFY2025
Structural risks
- Demand and competition: Digital Realty depends on demand for data centers. Competition can affect occupancy and rental rates, and expiring leases may not be renewed or replaced at the same or higher rates.
- Construction and power: Projects can face permitting delays, community opposition, supply-chain constraints, higher component costs and shortages of construction labor. Access to sufficient power and its cost can also affect development.
- Customer and geographic concentration: The largest customer represented approximately 11.7% of aggregate annualized recurring revenue at December 31, 2025. Northern Virginia accounted for 21.4% of total annualized rent at the same date, including investments in unconsolidated entities.
- Funding and debt: Digital Realty may be unable to refinance debt at maturity or may face less favorable terms. Its development and acquisition programs also depend on access to capital.
- Energy, water and regulation: Energy costs and environmental rules can increase expenses that the company may not be able to pass on fully. Some properties are in areas of high water stress and may face scarcity, higher costs or restrictions on consumption.
- REIT and international operations: Failure to qualify as a REIT would have significant adverse consequences. Foreign operations also bring exposure to changing regulations, tariffs, currency restrictions and difficulties enforcing agreements.
Bottom line
Our reading
Digital Realty combines recurring data center leases with connectivity services and a capital-intensive development business. Its locations and connected customer communities can help retain and expand relationships, while its backlog and pre-leased projects provide contracted future business. The trade-off is exposure to construction execution, power, financing costs and competition, with a meaningful share of rent concentrated in Northern Virginia.