A Look at Digital Realty Trust’s Valuation Following Expanded NVIDIA Partnership in Next-Gen AI Data Centers

Digital Realty Trust (DLR) is making headlines after expanding its partnership with NVIDIA to advance AI-optimized data center infrastructure at its Manassas, Virginia campus. The initiative targets next generation liquid cooling, power management, and energy efficiency.

See our latest analysis for Digital Realty Trust.

Digital Realty Trust’s expansion with NVIDIA comes as momentum builds in the AI data center space, but the market has not fully caught up. While the share price return over the past year is modest, at -4.89%, there has been impressive long-term resilience, with a 72% total shareholder return over three years that outpaces most peers. Recent dividend affirmations and upgraded earnings guidance show both current stability and longer-term potential as AI-related demand climbs.

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But with shares trading at a discount to analyst targets and Digital Realty lifting its outlook on strong AI demand, investors are left to wonder whether there is more upside ahead or if the market is already pricing in this growth.

Most Popular Narrative: 14.8% Undervalued

Digital Realty Trust’s most widely followed valuation sets its fair value at $197.70, comfortably above the last close price of $168.35. This suggests expectations for significant upside, assuming the narrative’s assumptions play out.

“Digital Realty's record backlog of leases, which have not yet commenced, indicates strong future revenue potential and earnings growth due to steady demand for data center capacity, particularly from AI and cloud service providers. The successful formation of Digital Realty's first U.S. hyperscale fund is expected to fuel future growth with up to $10 billion in investments, leading to enhanced revenue and returns through fees. This highlights its significant potential impact on long-term earnings sustainability.”

Read the complete narrative.

Want to know the engine behind this valuation? It all hinges on bold projections for top-line growth, thinner profit margins, and a future profit multiple that will raise eyebrows. Curious which numbers analysts are betting on? Dive in to uncover the surprising math driving this bullish fair value.

Result: Fair Value of $197.70 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing leasing trends or shifts in capital markets could quickly challenge analyst optimism and put pressure on Digital Realty Trust’s growth expectations.

Story Continues

Find out about the key risks to this Digital Realty Trust narrative.

Another View: Multiples Raise Questions

While fair value estimates highlight upside, current price-to-earnings multiples suggest caution. Digital Realty trades at 42.6 times earnings, significantly above peers (35.8x), its industry (26x), and the fair ratio of 27.8x. This gap means investors pay a sizable premium, increasing valuation risk if future growth disappoints. Will the market eventually push valuations toward that fair ratio?

See what the numbers say about this price — find out in our valuation breakdown.NYSE:DLR PE Ratio as at Nov 2025

Build Your Own Digital Realty Trust Narrative

If you see things differently or want to dig into the numbers on your own terms, creating a personalized narrative for Digital Realty Trust takes less than three minutes. Do it your way.

A great starting point for your Digital Realty Trust research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include DLR.

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