BTIG Initiates Coverage on Digital Realty, Equinix with Buy Ratings Amid AI Boom

BTIG has initiated coverage on data center real estate investment trusts (REITs) Digital Realty (DLR) and Equinix (EQIX) with Buy ratings, citing surging demand for artificial intelligence infrastructure as a primary growth catalyst. The investment firm's analysis highlights both companies' ability to capitalize on the AI-driven expansion, projecting high-single-digit to low-double-digit earnings growth over the next several years.

AI Demand and Power Scarcity Drive Outlook

According to BTIG, the insatiable demand from hyperscale cloud providers and AI companies is creating a favorable environment for established data center operators. The firm noted that both Digital Realty and Equinix possess extensive portfolios in prime Tier 1 markets where power scarcity is a significant barrier to entry, constraining new supply and tightening market conditions.

This dynamic is expected to support strong rental growth and high utilization rates. BTIG emphasized the companies' substantial development pipelines as a key factor that positions them to capture future demand in these power-constrained regions.

Digital Realty (DLR)

BTIG set a $215 price target for Digital Realty, implying a potential total return of 22.6%. The firm sees compelling growth driven by DLR's portfolio of over 300 data centers and a significant development capacity.

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• Development Pipeline: The company has $16.5 billion in active development projects and a land bank that could support an additional $65 billion of development, or approximately 5 gigawatts of power capacity.
• Earnings Growth: BTIG projects adjusted funds from operations (AFFO) per share to grow by 8.5% in 2026 and 12.2% in 2027.
• Financials: The firm noted DLR's flexible balance sheet, with a debt-to-EBITDA ratio of 4.7 times, and a growing private capital business that provides diverse funding sources.

Equinix (EQIX)

For Equinix, BTIG initiated coverage with a $1,210 price target, suggesting a potential total return of 18.9%. The firm expects Equinix's interconnection-rich platform, which hosts over 10,000 customers, to deliver strong internal growth from higher rents and increased utilization.

• Performance Metric: BTIG highlighted that Equinix has seen approximately 28% cumulative growth in monthly recurring revenue per cabinet over the last four years.
• Development Pipeline: The company has an $8 billion colocation development pipeline with anticipated 25% cash yields, alongside an $18 billion hyperscale development opportunity.
• Earnings Growth: Analysts project AFFO per share growth of 12.1% in 2026 and 8.8% in 2027.