Artificial intelligence is front and center in investors’ minds, but they may be overlooking high-profile initiatives that leverage the technology’s growth to generate income. Data center real estate investment trusts are companies that own and manage facilities that house information technology infrastructure. They are expected to benefit greatly as the demand for AI increases. “Data center REITs are an underrated AI winner because they work on the back end,” said Tejas Desai, director of thematic research at GlobalX ETF, which manages the Data Center & Digital Infrastructure ETF (DTCR). He calls them the “toll booths” of the AI economy. “Every interaction you have with the AI, every software, every workflow, every agent and robot, every interaction with the AI will pass through these data centers,” Desai said. Wells Fargo Investment Institute is one of the firms on Wall Street taking a bullish stance on the market. Analyst John Sheehan noted in a note Tuesday the “unprecedented demand” data center REITs have experienced. “We believe this subsector has sustained growth prospects, attractive margins and strong pricing power,” he said. Sheehan also believes it is an “attractive route to exposure to AI themes within the real estate sector, especially as AI use cases continue to expand and support sustained demand and pricing power.” Up about 40% year-to-date Unsurprisingly, data center REITs are the sector’s best performer, up about 40% year-to-date as of April 30, according to industry group Nareit. There are currently only three data center REITs listed in the FTSE Nareit US Real Estate Index Series: Equinix, Digital Realty Trust, and Iron Mountain, which recently pivoted from paper storage to data centers. Blackstone Digital Infrastructure Trust became the latest name to join the ranks of publicly traded data center REITs when it listed on the New York Stock Exchange last week. “Over time, we expect other private data center portfolios to come to the public markets, as the ability to raise capital and issue debt in the public debt market is a significant advantage for publicly traded REITs,” said John Wirth, executive vice president of research and investor support at Nareit. “I think the scope of what we need to build in this industry is far beyond what we can do in the private market.” A solid foundation built on AI Data center REITs have a very specific role in bringing facilities online, operating them for the duration of the contract, and collecting rent and income, Global X’s Desai said. Additionally, the two companies collectively already operate around 600 data centers around the world that are nearly full with rent-paying tenants, so they don’t rely on AI for their business. “Traditional data center activities such as enterprise digitization and cloud services provide primarily stable assets, but on top of that we also have the ability to do AI-driven development,” said Nareit’s Wirth. He also expects them to participate less in hyperscale training of models, and more in inference and post-training AI usage. “That’s where things like latency, location, and interconnectivity really matter,” Wirth added. “And that’s the strength of the data center REIT portfolio.”Equinix stock has a dividend yield of 1.9%. The company operates more than 280 data centers around the world. According to FactSet, the average analyst rating for the stock is “buy,” with nearly 14% upside potential compared to the average price target. Among those who are bullish on Equinix is Raymond James, who upgraded the stock to a strong buy after market performance on April 30th. “Equinix remains the global data center leader, its product complexity and diversity is unparalleled in the industry, and its network density is unparalleled, which we believe are the two biggest moats for its data center business,” analyst Frank Roussin said in a client note. The stock has increased 38% since the beginning of the year. Digital Realty Trust, which yields 2.5%, has an average analyst rating of Overweight, with an upside of nearly 16% to its average price target, according to FactSet. The company operates more than 300 data centers. DLR YTD Mountain Digital Realty Trust Year-to-date, Goldman Sachs has rated the stock as a Buy. “We believe Digital Realty is well-positioned to benefit from tight supply and demand in the data center industry, which we believe will last longer than most expect,” analyst James Schneider said in an April 22 note. Digital Realty Trust is up about 22% year to date in 2026. Finally, Iron Mountain has a 2.7% yield and has over 25 data centers worldwide. According to FactSet, the stock has an average rating of “overweight,” with an upside of about 5% to its average price target. The stock price has increased more than 50% since the beginning of the year. IRM YTD Mountain Iron Mountain Year to Date Those who want more diversified trading in data centers can purchase exchange-traded funds. The Global X Data Center & Digital Infrastructure ETF is up 40% since the beginning of the year and has a 5-star rating from Morningstar. Desai said the fund provides investors with pure exposure to companies within the broader data center ecosystem. Approximately 57% of the ETF’s holdings are real estate, the majority of which are REITs.
