10 Best Real Estate Stocks to Buy According to Billionaires

6. Digital Realty Trust, Inc. (NYSE:DLR)

Number of Billionaire Investors: 10

Number of Hedge Fund Holders: 47

Digital Realty Trust, Inc. (NYSE:DLR) brings companies and data together by delivering the full spectrum of data center, co-location, and interconnection solutions. Fitch Ratings believes that secular tailwinds, such as AI demand, cloud storage, and the migration away from on-premise data centers, support the company’s credit profile. Furthermore, demand growth, mainly for hyperscale AI-related applications, surpassed supply. Notably, the data center providers have leveraged this via pricing and new development. These demand tailwinds are some of the positive factors for Digital Realty Trust, Inc. (NYSE:DLR), says the ratings agency.

Scotiabank analyst Maher Yaghi upped the company’s stock to “Outperform” from “Sector Perform,” with an unchanged price objective of $208. Notably, the demand for computational power remains robust. Scotiabank, which opines that infrastructure demand is expected to remain strong, supporting a multi-year growth path for companies in the sector, added that Digital Realty Trust, Inc. (NYSE:DLR) significantly improved its balance sheet. Elsewhere, Michael Rollins from Citi maintained a “Buy” rating on the company’s stock with a price objective of $212.00.

The analyst sees the potential for Digital Realty Trust, Inc. (NYSE:DLR) to accelerate its core funds from operations per share (FFOPS) in the future. Furthermore, the analyst noted that the demand for Gen-AI workloads can benefit hyper-scale leasing, and the eventual pivot to greater inference demand can favourably impact the retail-centric business. Baron Funds, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Data center landlords such as Equinix and Digital Realty Trust, Inc. (NYSE:DLR) are benefiting from record low vacancy, demand outpacing supply, more constrained power availability, and rising rental rates. Several secular demand vectors, which are currently broadening, are contributing to robust fundamentals for data center space globally. They include the outsourcing of information technology infrastructure, increased cloud computing adoption, the ongoing growth in mobile data and internet traffic, and AI as a new wave of data center demand. Put simply, each year data continues to grow exponentially, and all of this data needs to be processed, transmitted, and stored – supporting increased demand for data center space. In addition, while it is still early innings, we believe AI could not only provide a source of incremental demand but also further accelerate existing secular trends by driving increased prioritization and additional investment in digital transformation among enterprises.”