Digital Realty CEO: AI Slowdown Won't Doom Data Center Market
Data center REIT stocks fell on AI slowdown fears, but Digital Realty's CEO says the sector can weather the uncertainty.
Shares of Digital Realty and Equinix, two of the largest publicly traded data center real estate investment trusts, declined following renewed concerns about a potential deceleration in artificial intelligence development and its downstream effect on infrastructure demand.
Despite the sell-off, Digital Realty's chief executive moved to reassure investors, characterizing any near-term AI slowdown as far from catastrophic for the data center real estate sector. The comments signal that company leadership views current market anxiety as an overreaction to broader AI uncertainty rather than a reflection of deteriorating fundamentals.
Read more Bank of America Warns Q3 Investment Banking Fees to Drop Over 10% →
Data center REITs have been among the primary beneficiaries of the generative AI boom, as technology companies raced to secure physical space for the servers and networking equipment powering large language models and cloud computing workloads. A pullback in AI spending, or even a pause in capacity expansion by major hyperscalers, could weigh on leasing demand — a concern now visibly reflected in equity prices.
Still, analysts and executives in the sector have consistently argued that even a moderated pace of AI buildout would leave data center operators with substantial long-term tailwinds. Electrification constraints, land scarcity, and years-long development timelines continue to limit new supply, providing a structural floor beneath demand for existing facilities.
The episode underscores how tightly data center valuations have become linked to sentiment around AI progress, making the sector unusually sensitive to any headline suggesting a shift in the technology's trajectory. Continue reading at Business News.
