Digital Realty Trust, Inc.

New York Stock Exchange
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Somewhat Bullish +45

Digital Realty Trust vs. Equinix: Which Real Estate Stock Is a Better Buy in 2026?

📊 Digital Realty Trust reported FY2025 revenue of $6.1 billion (up 10%) and net income of $1.3 billion.

🏗️ DLR expanded its pipeline by acquiring a majority stake in Northern Virginia data centers and purchasing 1,440 acres near Kansas City.

💰 Equinix generated $9.3 billion in FY2025 revenue but reported negative free cash flow of $400 million due to heavy capex.

🔌 Equinix serves over 10,500 customers globally with a focus on interconnection rather than just square footage.

⚡ Digital Realty faces risks from grid constraints and utility price volatility affecting data center uptime.

🛡️ Equinix addresses AI supply chain bottlenecks but remains exposed to global energy costs and cybersecurity threats.

💸 DLR maintains a lower debt-to-equity ratio of 1.1x compared to Equinix's 1.6x.

📈 Digital Realty achieved a net margin of 21.4% in FY2025 versus Equinix's 14.6%.

🏢 Both companies operate as REITs, though DLR offers higher dividend yields due to its lease-heavy model.

📉 The author recommends Digital Realty for passive income but suggests building a position gradually given premium valuations.

🚫 Digital Realty was excluded from The Motley Fool Stock Advisor's top 10 stocks list for the current period.

Bullish Signals
  • Digital Realty achieved a significant 10% revenue increase to $6.1 billion in fiscal year 2025.
  • Net income for Digital Realty surged to $1.3 billion, more than doubling from the prior year's $602.5 million.
  • The company maintains a healthy debt-to-equity ratio of 1.1x and strong liquidity with $2.4 billion in free cash flow.
  • Digital Realty successfully expanded its footprint by acquiring assets in Northern Virginia and securing 1,440 acres near Kansas City.
  • Equinix continues to grow revenue by 5.9% to $9.3 billion while serving a diverse base of over 10,500 customers.
  • Both companies are well-positioned to capitalize on the massive artificial intelligence infrastructure build-out.
Risk Factors
  • Equinix reported negative free cash flow of approximately $400 million in FY2025 due to significant capital expenditures.
  • Digital Realty faces operational risks from reliance on third-party utility providers, including grid constraints and price volatility.
  • Equinix has a higher debt-to-equity ratio of 1.6x compared to Digital Realty's 1.1x.
Full Analysis
The article compares Digital Realty Trust (DLR) and Equinix (EQIX) as potential investments for 2026, highlighting their distinct strategies in the data center sector. Digital Realty focuses on owning campuses and leasing space to major cloud providers like Amazon and Microsoft, while Equinix prioritizes global interconnection services for over 10,500 customers. Both companies are positioned to benefit from the ongoing build-out of artificial intelligence infrastructure. Digital Realty reported fiscal year 2025 revenue of nearly $6.1 billion, a 10% increase, with net income rising significantly to $1.3 billion and a net margin of 21.4%. The company completed a $12.3 million share secondary offering and acquired 1,440 acres near Kansas City to expand its development pipeline. Its balance sheet shows a debt-to-equity ratio of 1.1x and strong free cash flow of $2.4 billion. Equinix generated approximately $9.3 billion in revenue for fiscal year 2025, growing by 5.9%, with net income reaching $1.4 billion. However, the company reported negative free cash flow of roughly $400 million due to heavy capital spending on global platform expansion. Equinix maintains a debt-to-equity ratio of 1.6x and faces risks related to AI supply chain bottlenecks and cybersecurity threats. The author concludes that Digital Realty is the preferred choice for investors seeking passive income due to its REIT structure and higher dividend yield, despite both companies trading at premium valuations. The article notes that Digital Realty was not included in a recent list of top 10 stocks by The Motley Fool Stock Advisor, suggesting caution or alternative opportunities.