Digital Realty CEO Downplays AI Slowdown Fears for Data Center Landlords

Data center real estate investment trusts have been caught up in recent market worries that artificial intelligence spending could cool, but Digital Realty’s chief executive says the worst-case scenario is far from a collapse in demand for the facilities that house cloud and AI workloads.

According to remarks reported by CNBC, the Digital Realty Trust CEO characterized a potential slowdown in AI momentum as something short of an “end of the world” scenario for data center real estate. The comments come as investors reassess how dependent the sector has become on aggressive AI infrastructure buildouts, with warnings from industry voices about the pace of AI advancement weighing on shares of the largest data center REITs.

The sector’s concerns center on the possibility that hyperscale spending on AI capacity might not grow as rapidly as anticipated, which could reduce demand for colocation and interconnection services. Digital Realty and Equinix, the two largest publicly traded data center REITs, both saw their shares slump following those warnings, as investors weighed how central AI demand has become to growth expectations across the industry.

The argument from Digital Realty’s leadership is essentially that data center fundamentals rest on more than the AI cycle. Enterprises continue to migrate workloads to hybrid and cloud environments, network interconnection needs keep growing, and data sovereignty requirements are driving localized capacity builds around the world — trends that predate the current AI boom and would persist even if AI spending decelerated.

Market reaction on the day offered a modest rebound. Digital Realty shares traded at $188.58, up 1.73% from the prior close of $185.37, valuing the company at roughly $65.49 billion. Equinix, which operates interconnected data center campuses across five continents, changed hands at $1,037.72, a 1.36% gain from $1,023.81, for a market capitalization of approximately $100.61 billion.

Both companies sit in the specialty REIT category, a segment that has attracted heightened investor attention as AI training and inference workloads demand more power-dense facilities, higher-capacity cooling, and dense fiber connectivity. That attention cuts both ways: AI enthusiasm has lifted valuations across the sector, but it also means any hint of an AI slowdown hits data center operators disproportionately compared with traditional real estate.

Digital Realty’s Platform Digital offering positions the company as a full-spectrum provider of data center, colocation, and interconnection services, while Equinix emphasizes its global footprint and ecosystems that link networks, clouds, and enterprises. Both strategies rely on recurring enterprise demand that extends beyond AI-specific deployments.

What to watch

• Upcoming quarterly earnings from Digital Realty and Equinix, particularly bookings, backlog, and comments on hyperscale AI demand.
• Guidance updates on leasing pipelines and development capacity as AI infrastructure spending trends become clearer.
• Further commentary from cloud providers and chipmakers on AI capex plans, which shape data center demand forecasts.

Source: original release