Digital Realty Q2 2025: $9B Pipeline and Hyperscale Fund Signal a New AI Infrastructure Era
Digital Realty delivered record Q2 results, but the real story is a $9B development pipeline and the launch of a $3B Hyperscale Fund designed to scale AI infrastructure globally.
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Digital Realty Trust (NYSE: DLR) reported a record-breaking Q2 2025, delivering results that exceeded Wall Street expectations while laying the foundation for an AI-focused expansion strategy.
Revenue rose 10% year-over-year to $1.49 billion, Core FFO per share reached a record $1.87 (+13%), and bookings hit an all-time high of $177 million.
Yet the true story goes beyond quarterly beats.
With a $9 billion development pipeline, a newly launched $3 billion U.S. Hyperscale Fund, and management framing AI adoption as still in its “early innings,” Digital Realty is positioning itself not just as a REIT but as a global AI infrastructure operator.
Earnings Breakdown & Infrastructure Strategy
Core Financials (Q2 2025):
Revenue: $1.49B (+10% YoY, +6% QoQ)
Net Income: $1.02B (vs. $65M in Q2 2024)
GAAP EPS: $2.94 (boosted by one-time gains)
Core FFO per share: $1.87 (+13% YoY, beating $1.74 est.)
Adjusted EBITDA: $823M (+13% YoY)
Operational Highlights:
Record $177M in bookings, with $135M at DLR’s share
$90M of that from 0–1 MW + interconnection products — a critical growth driver
139 new customers added, underscoring demand diversification
Renewal spreads: +7.3% (cash) and +9.9% (GAAP)
Committed backlog: $826M, with $241M scheduled to commence in H2 2025
CapEx and Development:
$9B pipeline in play, including 734 MW under construction with expected stabilized yields of 12.2%
96 MW delivered in Q2, 98% pre-leased — evidence of sustained demand visibility
267 acres acquired for ~680 MW of additional IT capacity
Digital Realty’s investment case rests on this blend of near-term leasing momentum and long-lead development, positioning it for the accelerating demands of AI and hybrid cloud.
Regional Growth Signals
Management emphasized that the strongest momentum remains in North America, where leasing records continue to be set.
Large block discussions are already stretching into late 2026 and early 2027, reflecting the binding constraint of grid capacity rather than lack of customer demand.
CEO Andy Power described AI workloads as bifurcating between training in hyperscale campuses and inference at the edge, a pattern Digital Realty is positioned to serve given its “full spectrum” platform.
He noted that AI adoption today is “in its early innings,” heavily concentrated in the U.S., but expected to globalize over time in a manner similar to cloud adoption.
No new site locations were disclosed by geography this quarter. Instead, the company highlighted its backlog visibility and pre-leasing levels as evidence of global demand resiliency.
The Global Hyperscale Fund
A defining development this quarter was the launch of Digital Realty’s inaugural U.S. Hyperscale Data Center Fund, oversubscribed with $3 billion of equity commitments and structured to support up to $10 billion of investments.
This initiative serves multiple strategic purposes:
Preserves balance sheet strength by offloading capital intensity while keeping leverage at 5.1x net debt-to-EBITDA.
Drives capital efficiency, with DLR retaining a minority equity stake and generating recurring fee income as fund manager.
Creates a scalable template that could be replicated in international markets, particularly where sovereign wealth funds and institutional investors want exposure to hyperscale AI infrastructure.
The fund structure signals that Digital Realty intends to compete with hyperscalers on delivery scale while keeping its REIT model intact. If extended to emerging markets, it could reshape how global AI data centers are financed and operated.
Balance Sheet & Financing
Liquidity: $7B+ at quarter-end
Net debt / EBITDA: 5.1x, below target levels
Debt profile: 94% fixed-rate, 96% unsecured, 4.6-year average maturity, weighted average cost of 2.7%
Capital raising: $719M via ATM equity issuance; $975M from bonds; $65M from a non-core data center sale
This balance sheet discipline gives Digital Realty the flexibility to accelerate development while maintaining its investment-grade profile — a critical differentiator in a capital-intensive sector.
Forecast & Strategic Close
Based on Q2 results, management raised full-year 2025 guidance:
Revenue: $5.925–$6.025B (vs. prior $5.8–$5.9B)
Core FFO/share: $7.15–$7.25 (vs. prior $7.05–$7.15)
Adjusted EBITDA: $3.2–$3.3B (vs. prior $3.125–$3.225B)
Investor Takeaways:
CapEx intensity is ramping: The $9B pipeline reflects a sector racing to secure capacity for AI.
AI convergence is real: Demand is not just hyperscale — interconnection and small-block leasing are central to AI-enabled workloads.
Execution risk remains high: The gating factor is power availability, not demand. Delivering new megawatts on time will determine whether Digital Realty keeps pace with hyperscalers.
Bottom line: Q2 2025 will be remembered less for Digital Realty’s earnings beat and more for the strategic signals.
The combination of a $9B pipeline, record leasing, and the launch of the Hyperscale Fund shows a REIT leaning fully into the AI era.
Success will hinge on whether it can turn backlog and capital structure innovation into sustainable global delivery, before grid and policy bottlenecks slow momentum.