Key Highlights

● Digital Realty signed a record $627 million of annualized rent at its share.

● Revenue reached about $1.9 billion, up 21%, with core FFO of $2.10 per share.

● The 2026 core FFO outlook rose to $8.30 to $8.35 per share.

● The diluted EPS forecast was cut to $2.90 to $2.95 per share.

Digital Realty Trust (NYSE:DLR) heads into Friday's session with a set of third-quarter numbers that land squarely in the market's argument over AI spending. The data-center REIT reported after Thursday's close that it signed a record $627 million of annualized rent at its share, or $855 million at 100% share, according to its release.

Revenue reached about $1.9 billion, up 21% from a year earlier. Core funds from operations excluding net promote income came to $2.10 per share, compared with $1.89 a year ago and $2.13 in the second quarter. Diluted EPS was $0.48.

No reliable pre-market quote for the stock was found, so its direction ahead of the bell is unconfirmed.

Management lifted its 2026 core FFO outlook, excluding net promote, to $8.30 to $8.35 per share from $8.15 to $8.20 in July. Total Revenue guidance, excluding promote income, rose to $7.05 billion to $7.125 billion from $6.85 billion to $6.95 billion, and same-capital cash NOI growth guidance moved up to 5.25% to 5.75%.

Not every line went up. The diluted EPS forecast was cut to $2.90 to $2.95 from $3.10 to $3.15, and G&A guidance rose. Development capex guidance was unchanged at $4.25 billion to $4.75 billion, with targeted stabilized yields of 10% or more.

"Digital Realty extended its track record of execution in the third quarter with record leasing, an expanding backlog," CEO Andy Power said in the release.

The larger-than-1-megawatt category, which captures hyperscale and AI-style deployments, accounted for $474.2 million of bookings at Digital Realty's share, with Asia Pacific contributing $261.3 million and the Americas $203.0 million. The smaller 0-1 MW plus interconnection category posted a record $152 million.

The signed-but-not-yet-commenced Backlog stood at $1.8 billion, and new leases carry a weighted-average commencement lag of 17 months. Renewals were signed at cash spreads of 11.8% and GAAP spreads of 17.0%, above the company's full-year outlook of 10% to 12% on a cash basis. That pricing power is the clearest sign that Demand for existing capacity remains tight. Digital Realty also acquired $742 million of land and lifted its Teraco stake to about 77% after quarter end.

Why the S&P 500 listing and the macro tape matter

As an S&P 500 member and one of the largest REITs, Digital Realty sits in both real-estate and broad-market index funds. It also trades as an AI-infrastructure proxy, which cuts both ways today.

Nasdaq-100 futures were down about 2.6% around 8 a.m. ET, according to market quotes, after Amazon (NASDAQ:AMZN)'s free-cash-flow outflow and $220 billion capex plan sharpened worries about AI cash burn. For landlords like Digital Realty, heavy hyperscaler spending is the demand engine, so a market that punishes spenders raises questions about how long that engine runs.

Rates are the other weight. The 10-year Treasury Yield was around 4.94%, near levels that typically pressure REIT valuations, and the Federal Reserve hiked in September and held this week with two dissents in favor of another hike.

Risks and what to watch

The 17-month commencement lag means today's record bookings turn into revenue mostly in 2027 and 2028, leaving the company exposed if AI customers slow projects. Higher funding costs are another risk; Digital Realty said it completed about $1.75 billion of long-term Debt issuance in October at around 4.0%.

Watch how the stock trades relative to the S&P 500 real-estate sector at the open, and whether analysts revise targets after Thursday's call. The next macro test is the Employment Cost Index and Chicago PMI on Friday, then next week's jobs report.