Abstract
Digital Realty Trust Inc will report quarterly results on February 05, 2026 Post Market; investors look for revenue growth, stable margins, and EPS improvement, with attention on leasing momentum, interconnection, and AI capacity ramps.Market Forecast
- Based on current-quarter forecasts, the market anticipates revenue of $1.58 billion, up 7.97% year over year, EBIT of $217.89 million with a slight year-over-year decline of 3.44%, and EPS of $0.32, up 18.70% year over year. Margin commentary from the prior report implies a focus on maintaining mid-50% gross margin and modest net margin stabilization, while adjusted EPS is expected to improve from last quarter’s reported base. - The main business is expected to be driven by leasing and other services, with continued tenant expansions and cross-connects supporting interconnection-related revenue growth and healthy backlog conversion. - The most promising segment remains leasing and other services at $1.54 billion revenue last quarter, supported by data center demand tied to AI and cloud expansions; continued tenant ramp and new deployments point to steady year-over-year gains.Last Quarter Review
- Digital Realty Trust Inc’s last reported quarter delivered revenue of $1.58 billion, a gross profit margin of 54.48%, GAAP net income attributable to common shareholders of $67.81 million, a net profit margin of 4.35%, and adjusted EPS of $0.15; revenue rose 10.20% year over year while GAAP net income decreased sequentially as indicated by a quarter-on-quarter change of -93.43%. - A key highlight was solid top-line delivery with revenue ahead of the forecast baseline and continued margin discipline at the gross level despite mix and ramp timing. - The main business “Leasing and Other Services” contributed $1.54 billion, underscoring the centrality of core colocation and services to overall performance, with incremental contribution from fees and ancillary services at $41.14 million.Current Quarter Outlook (with major analytical insights)
Main business: Colocation leasing and other services
Leasing and other services constitute the company’s core revenue engine and carried $1.54 billion in the prior quarter. The current quarter’s projected revenue of $1.58 billion implies sustained demand, underpinned by backlog conversion and ongoing enterprise and cloud provider expansions. With a prior-quarter gross margin of 54.48%, maintaining efficient capacity utilization and mix toward interconnection-rich deployments will be important in preserving margin quality. Pricing discipline and longer contract durations could provide incremental resilience if power and operating costs fluctuate. The principal monitoring item is large customer deployments timing; any slip or acceleration may shift revenue recognition and influence EBIT.Interconnection and cross-connect density typically correlate with higher unit economics and lower churn. Expansion of cross-connects within existing campuses can support recurring revenue and improve retention, feeding into predictable cash flows. For the quarter at hand, we expect steady interconnection activity to offset potential variability in churn or move-outs from legacy enterprise footprints. The EBIT forecast of $217.89 million, down 3.44% year over year, suggests incremental operating investments—such as labor, energy optimization, or go-to-market capacity—may be weighing on reported operating profit, even as revenue grows. Execution on planned operating efficiencies and incremental utilization should drive progressive EBIT normalization over the course of the year.
Most promising business: Large-scale leasing tied to AI and cloud expansions
The demand cycle driven by AI training and inference continues to shape hyperscale and high-density colocation requirements, and this remains the largest incremental growth vector for the company’s leasing book. The last quarter’s $1.54 billion from leasing and other services provides a base, and the current quarter’s revenue forecast points to the continuation of this mix-led expansion. New capacity introductions across key metros, combined with pre-lease commitments and expansions from cloud and AI customers, can lift booked-not-billed revenue, set to convert as sites reach ready-for-service milestones. The principal swing factors are power availability, deployment schedules, and regional permitting cadence, all of which can impact the timing of revenue ramp.Interconnection intensity is critical for AI and cloud nodes, and higher cross-connect attach rates can further support revenue per cabinet or per megawatt. As customers balance GPU-dense clusters with network egress and edge aggregation, campuses with established ecosystems tend to capture higher wallet share. We expect this to support both revenue growth and the maintenance of gross margin near the mid-50% area, with incremental upside where interconnection penetration rises. However, EBIT pressure may persist in the near term due to pre-operational costs and ramp inefficiencies as newly delivered capacity scales; this aligns with the forecasted year-over-year decline in EBIT despite revenue growth.
Factors most impacting the stock this quarter
Earnings-per-share trajectory and margin trends are likely to be the core equity drivers this quarter. The market is watching for confirmation that adjusted EPS can rise from the previous quarter’s $0.15 to the forecasted $0.32 while maintaining gross margin discipline around 54.48%. Any deviation due to cost inflation, energy pricing, or higher pre-opening expenses may challenge the EPS path. Conversely, stronger-than-expected backlog conversion, higher interconnection capture, or better cost absorption as new capacity ramps could yield positive EPS surprise.Leasing metrics, including new signings, renewals, pricing, and churn, will anchor sentiment. A balanced book of hyperscale and enterprise wins with favorable pricing and longer durations would reinforce the demand thesis. Watch for commentary on booked-not-billed and same-capital cash NOI growth, as these can provide clarity on the forward revenue cadence. Finally, capital allocation and balance sheet updates—such as debt laddering, refinancing, and development spend—can directly influence valuation through perceived risk and growth capacity. With the EPS forecast signaling improvement and revenue growth at 7.97% year over year, a clean print with healthy leasing color should support a constructive equity reaction.
Analyst Opinions
Recent institutional views have tilted positive, with several prominent firms maintaining constructive stances while a minority remain cautious. Positive opinions include Buy ratings with price targets around the low-$200s from well-followed institutions, reflecting confidence in AI-driven demand, campus interconnection ecosystems, and development pipeline conversion. Neutral or Hold stances emphasize valuation and near-term EBIT pressure, and a smaller subset maintain Sell views tied to earnings leverage and cost timing. Overall, bullish opinions outnumber bearish calls.- A leading investment bank reiterated a Buy with a $210.00 price target in the past six months, citing support from secular demand for data center capacity, solid leasing momentum, and a well-positioned development pipeline expected to convert to revenue across 2026. - Another well-known research house maintained a Buy with a $200.00 price target, pointing to continued hyperscale and AI-related expansions that should underpin booked-not-billed conversion and enhance interconnection density. - A prominent North American bank reaffirmed a Buy at $207.00, highlighting portfolio breadth across key metros and anticipated improvement in adjusted earnings as newly delivered capacity ramps through 2026.
The majority perspective underscores that growth visibility is improving as AI and cloud-driven leasing feeds the revenue base, even if EBIT and EPS face transitory drag from pre-operational costs. This view expects revenue of $1.58 billion and EPS of $0.32 for the quarter, with mid-50% gross margin, suggesting operating leverage should strengthen as deployments scale and cost absorption improves. The constructive stance also emphasizes the importance of development execution, power procurement, and interconnection penetration. A better-than-expected leasing print, firm pricing, and clear guidance on booked-not-billed conversion could validate the bullish thesis and support sentiment into the next fiscal periods.
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