Digital Realty Trust Downgraded with $210 Target Despite 1.2 GW Expansion Pipeline
HSBC downgraded Digital Realty Trust to Hold with a $210 price target, citing a premium Price/FFO of 25.3x. The rating follows Q1 core FFO of $2.04 per share (up 15.3% YoY), $1.635 billion revenue (up 16.2%) and a 1.2 GW expansion pipeline backed by a $1.8 billion backlog.
1. Strong Q1 2026 Results
Digital Realty reported core funds from operations of $2.04 per share, a 15.3% year-over-year increase, and total operating revenues of $1.635 billion, up 16.2%. A record $1.8 billion backlog provides clear visibility into data center leasing and development through 2028.
2. Analyst Holds and Price Targets
HSBC downgraded the stock to Hold with a new $210 price target, noting a premium Price/FFO ratio of 25.3x and suggesting that recent gains may already reflect future growth. Another analyst set a $215 target based on similar valuation concerns.
3. Expansion Pipeline and Backlog Visibility
The company has 1.2 GW of capacity under construction and sees total expansion reaching 6 GW to meet hyperscaler and AI inferencing demand. This pipeline supports long-term revenue growth, although near-term upside may be limited by current valuation levels.