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Data Center REITs: One Of My Highest-Conviction Calls
2026-05-18 · via All Articles on Seeking Alpha

Summary

  • Data center REITs have delivered sector-leading, consistent outperformance, driven by secular tailwinds like AI, cloud computing, and digital transformation.
  • DLR, EQIX, and IRM are trading at premium valuations, reflecting strong fundamentals, but current multiples suggest waiting for a pullback before adding exposure.
  • American Tower is the top pick for new data center exposure, offering integrated connectivity and compute, trading at a discount with a 4% yield and significant upside potential.
  • Capital inflows, robust development pipelines, and premium NAVs highlight the sector's long-duration growth story, with power and connectivity as emerging competitive moats.
  • Looking for a helping hand in the market? Members of iREIT®+HOYA Capital get exclusive ideas and guidance to navigate any climate. Learn More »
3D matrix abstract spiral background

XH4D/E+ via Getty Images

I began covering the data center REIT sector around 2012.

At the time, data centers were still considered a niche corner of the REIT market, as many investors simply viewed them as highly specialized industrial buildings with

119.6K Followers

Analyst’s Disclosure: I/we have a beneficial long position in the shares of O, PLD, DLR, EQIX, IRM, AMT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Author's Note: Brad Thomas is a Wall Street writer, which means he's not always right with his predictions or recommendations. Since that also applies to his grammar, please excuse any typos you may find. Also, this article is free: written and distributed solely to assist in research and to provide a forum for second-level thinking.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.