BMO Capital Reaffirms Outperform on Digital Realty (DLR), Names It Top Pick

Digital Realty Trust Inc. (NYSE:DLR) is one of the best data center stocks to buy now. On August 19, analysts from BMO Capital reiterated their Outperform rating on Digital Realty Trust Inc. (NYSE:DLR) with a $195 price target. His decision comes even as data center stocks have recently come under pressure, which is partly attributed to rising interest rates.

Despite that, the analysts pointed out that second-quarter results across the group were broadly healthy, with estimates moving higher. Demand for data centers remains strong, pricing trends are supportive, and hyperscale customers continue to emphasize infrastructure buildouts to support AI, with sector-wide investments expected to approach $550 billion by 2026.

BMO Capital Reaffirms Outperform on Digital Realty (DLR), Names It Top Pick

A panoramic aerial view of a modern data center with high-performance computing.

Against this backdrop, the analysts named Digital Realty Trust Inc. (NYSE:DLR) its top pick in the space, citing confidence in the company’s ability to deliver high single-digit Core FFO growth. They highlighted that this growth outlook is supported by the company’s backlog and lease mark-to-market potential. As per their report, the analysts are currently modelling Core FFO growth of 7.7% in 2025 and 7.9% in 2026, with an opportunity to push above 10% in 2027.

Earlier on August 11, Michael Funk, an analyst from Bank of America Securities, had reaffirmed a Buy rating on the stock with a steady price target of $210.

Digital Realty Trust Inc. (NYSE:DLR) provides data center, colocation, and interconnection solutions with over 300 data centers spread across more than 25 countries.

While we acknowledge the potential of DLR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than DLR and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.