- Data center REITs Equinix and Digital Realty are benefiting from a shift in AI demand toward inference workloads near population centers.
- Both firms reported strong earnings and share price gains as Wall Street recognized their strategic positioning.
- Equinix and Digital Realty are expanding development in power- and land-constrained metro markets, leveraging unique expertise.
- Long-established data center ecosystems and control of powered land create barriers for new entrants.
AI Demand Shifts to Inference
According to Bisnow, data center REITs Equinix and Digital Realty are seeing market momentum as the surge in artificial intelligence demand pivots from large-scale model training to inference workloads. Unlike the initial wave of AI data center activity, which favored massive campuses in remote regions, current trends now prioritize smaller, highly connected data center hubs close to end users. This plays to the historic strengths of both REITs, who control more than 600 data center facilities worldwide.
Strong Earnings and Market Response
Recent earnings reports from both firms have triggered a positive reaction on Wall Street. Equinix’s Q4 bookings soared 42% year-over-year, with revenue topping expectations. Digital Realty posted a 10% annual earnings increase for 2025. Equinix’s share price jumped nearly 14% in a day, and Digital Realty saw a spike of over 10% following earnings.
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Development in Key Metro Hubs
Both data center REITs are focusing development on primary global metro areas where land and power supply are tight—an approach only a handful of operators can pursue. Equinix is building 52 projects mainly in Chicago, Dallas, New York, Seattle, and D.C. Digital Realty has 769 megawatts underway in major metros, while also holding 5 GW of powered land. The company has also recently adjusted capital allocations tied to a major incentive-backed project in North Texas, reflecting a disciplined approach to where it deploys new capacity. This substantial investment—often ahead of leasing activity—gives them the ability to deliver capacity quickly versus competitors constrained by power or permitting challenges.
Incumbent Advantage and Future Growth
Industry observers note that Equinix and Digital Realty’s extensive data center ecosystems, built over years in major markets, position them as key beneficiaries of inference-driven demand. Their networks offer proximity to cloud providers and robust connectivity options, making them difficult for new entrants to match. Investors and analysts project ongoing tailwinds for these data center REITs as enterprises and cloud clients expand AI inference needs around the globe.
