Digital Realty Trust (DLR) is back in focus after filing a US$7.5b at-the-market follow-on equity offering, alongside fresh attention on its first quarter revenue update tied to AI infrastructure demand.

Despite a 2.45% 1 day share price decline and a 3.07% 7 day share price pullback to US$194.78 following the US$7.5b at the market offering, Digital Realty Trust still has a 6.78% 1 month and 13.49% 3 month share price return, alongside a 20.25% 1 year total shareholder return and 119.78% 3 year total shareholder return. This suggests momentum has been building over time as the market reacts to AI linked revenue growth and recent workforce and capital plans.

If AI infrastructure is on your radar after this update, it could be worth scanning the wider opportunity set through our 40 AI infrastructure stocks

So with AI driven revenue, a US$7.5b equity program and the stock trading at an intrinsic discount estimate, is Digital Realty still offering value, or is the market already pricing in its future growth?

Most Popular Narrative: 76.4% Overvalued

According to the most followed narrative from Unike, the fair value of Digital Realty Trust sits at $110.45 versus the last close of $194.78. This difference puts a sharp spotlight on what is driving that gap.

Digital Realty should be a leading global provider of AI-ready and hyperscale data centers, with stronger cloud partnerships, a global footprint, and higher-margin interconnection services.

It is worth exploring what kind of revenue run rate, margin profile, and future profit multiple Unike believes can justify that lower fair value. The narrative leans on specific growth assumptions and a premium earnings multiple that may surprise you, especially given Digital Realty Trust's current AI centric positioning.

Result: Fair Value of $110.45 (OVERVALUED)

However, investors still need to watch for interest rate pressure on this highly leveraged REIT, as well as any signs that hyperscalers slow or shift their data center spending.

Another Angle On Value

Unike’s narrative points to a fair value of $110.45, which lines up with a rich current P/E of 51.2x versus a fair ratio of 30x and a North American Specialized REITs average of 28.4x. That kind of gap can cap upside or magnify downside if sentiment cools.

For a clearer sense of how the current P/E stacks up against what the market could move towards, investors can use our valuation breakdown as a reference point, then decide whether that premium fits their own risk tolerance. See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Digital Realty Trust for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment clearly split between risk and reward, now is the time to review the numbers yourself and decide where you stand. To weigh both sides in more detail, start with these 3 key rewards and 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.