Digital Realty Trust has recently seen its price target upgraded by TD Cowen, signaling confidence in the data center giant's financial health and growth prospects. The company concluded its fiscal year with record-breaking results, particularly in leasing activities, underscoring the escalating demand for digital infrastructure. This positive outlook is fueled by robust performance across various segments, including interconnection and colocation services, which are critical for supporting advanced technologies like AI and cloud computing.
The increase in Digital Realty's target price by TD Cowen is a direct response to the company's exceptional fourth-quarter earnings and a strong overall performance in 2025. Despite maintaining a 'Hold' rating, the upward revision of the price target indicates a positive recalibration of market expectations for the real estate investment trust (REIT). The analyst firm highlighted that Digital Realty's results surpassed its own guidance in key financial metrics, suggesting a potentially brighter future for the company's stock.
TD Cowen's Raised Price Target and Digital Realty's Exceeding Expectations
TD Cowen adjusted its price target for Digital Realty Trust shares from $179 to $185, while retaining a 'Hold' recommendation. This decision stems from Digital Realty's impressive fourth-quarter results, which surpassed analysts' expectations. The firm noted that the company's performance, particularly strong renewal spreads anticipated in 2026, could lead to better Core FFO (Funds From Operations) per share growth than initially forecasted. This positive revision underscores a growing confidence in Digital Realty's operational efficiency and its capacity to leverage market opportunities effectively.
Digital Realty's CEO, Andy Power, emphasized that 2025 represented a pivotal year for both the company and the broader data center industry. The firm not only met but exceeded its financial guidance across crucial metrics, including revenue, EBITDA, and core FFO per share. A notable achievement was the record-breaking leasing activity, with new leases totaling over $1 billion for the second consecutive year, and overall bookings reaching $1.2 billion in 2025. This figure represents a nearly 70% increase compared to the average annual bookings over the preceding five years, clearly illustrating a substantial acceleration in demand within the sector and reinforcing TD Cowen's optimistic stance.
Strategic Growth in Interconnection and Colocation Services
Digital Realty's robust growth is significantly bolstered by the accelerating demand for its interconnection and colocation services. CEO Andy Power pointed out that these areas have emerged as critical drivers for the company's expansion. Bookings for interconnection offerings alone achieved a new record, nearing $340 million during the year, which marks a more than 35% increase from 2024. This growth signifies the increasing reliance of businesses, cloud providers, and technology companies on robust, scalable digital infrastructure to manage complex cloud computing, artificial intelligence, and extensive data workloads.
As a leading data center REIT, Digital Realty Trust specializes in owning, developing, and operating facilities that form the backbone of digital infrastructure globally. These data centers are essential for storing vast amounts of data, running demanding applications, and ensuring seamless global connectivity. The sustained demand for these services, particularly with the rapid advancements in AI and cloud technologies, positions Digital Realty for continued success. The company's strategic focus on expanding its interconnection capabilities and colocation footprint allows it to meet the evolving needs of its diverse clientele, further solidifying its market position and contributing to its positive financial outlook.