Digital Realty Trust reports strong Q4 2025 earnings with record revenue growth, strategic initiatives in AI, and an optimistic outlook for 2026.
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Digital Realty Trust Reports Strong Q4 2025 Earnings: Key Takeaways and Future Outlook
Digital Realty Trust has delivered impressive financial results for the fourth quarter of 2025, showcasing strong growth in both revenue and adjusted EBITDA. The company has highlighted its strategic positioning to capitalize on the growing demand for data center capacity, particularly driven by enterprise AI and cloud computing. As Digital Realty continues to evolve its operational strategies and expand its market presence, investors are keen to understand the implications for future growth and profitability.
Financial Performance
In Q4 2025, Digital Realty Trust reported Core FFO per share of $1.86, reflecting an 8% year-over-year growth. The strong financial performance was supported by robust demand for data center capacity, with the company achieving record leasing activity. Key financial metrics included:
- Revenue: Digital Realty posted strong double-digit growth in revenue, driven by significant contributions from its interconnection business.
- Adjusted EBITDA: The company reported solid growth in adjusted EBITDA, reflecting operational efficiency and effective cost management.
- Leasing Activity: In Q4, the company signed leases representing $400 million of annualized rent, resulting in a record leasing quarter for the 0 to 1 megawatt interconnection category. This segment alone accounted for 96 million, marking a 7% increase from the previous record set in Q2 2025.
The total backlog reached a record $1.4 billion, showcasing the strong demand fundamentals that underpin Digital Realty’s growth strategy as it anticipates continued robust leasing activity in the coming quarters.
Strategic Initiatives
Digital Realty Trust has undertaken several strategic initiatives aimed at enhancing its service offerings and expanding its footprint in key markets. These initiatives include:
- Platform Digital Expansion: The company has successfully leveraged its Platform Digital to create interconnected ecosystems across multiple regions. Recent wins include partnerships with a leading technology services firm and a multinational manufacturing company, both of which are utilizing Digital Realty’s infrastructure to support advanced AI workloads.
- Focus on AI and Cloud Demand: Digital Realty has positioned itself as a key player in supporting enterprise AI and cloud demands. The company’s data centers are strategically located in major population and GDP centers, making them ideal for hosting inference workloads as enterprises operationalize AI technologies.
- CapEx Investments: Digital Realty invested $930 million in development CapEx in Q4, bringing total spend for the year to $3 billion. The company is focused on expanding its development pipeline, which currently stands at 10 billion with an expected stabilized yield of 11.9%. This expansion is crucial as demand for data center capacity continues to grow.
Future Outlook
Looking ahead, Digital Realty Trust has provided optimistic guidance for 2026, reflecting the company’s confidence in its operational strengths and market positioning. Key highlights from management’s outlook include:
- Core FFO Guidance: The company expects Core FFO per share to range between $7.90 and $8.00, representing an 8% year-over-year growth.
- Revenue Growth: Digital Realty anticipates total revenue and adjusted EBITDA growth of more than 10% in 2026, demonstrating the underlying strength of its business model.
- Cash Renewal Spreads: Management expects cash renewal spreads of between 6% and 8%, supported by strong demand and attractive pricing in the market.
- Power-Based Occupancy: Power-based occupancy is expected to improve by an additional 50 to 100 basis points from the approximate 89% at year-end 2025, reflecting the growing utilization of its data centers.
Management also emphasized the importance of maintaining liquidity, with nearly $7 billion available to invest in data center projects. This financial flexibility will enable Digital Realty to navigate the evolving market landscape effectively.
Conclusion
Digital Realty Trust has demonstrated robust financial performance in Q4 2025, driven by strong demand for data center capacity and strategic operational initiatives. The company’s focus on AI and cloud computing positions it well for future growth, while its substantial backlog and ongoing investments in development provide visibility and predictability for investors. As Digital Realty continues to execute on its growth strategy, it remains well-positioned to capitalize on the increasing demand for interconnected digital infrastructure. Investors can look forward to the company’s continued momentum as it navigates the evolving landscape of the data center industry.