Data Centers: The New Hot Property for Crypto and AI
The rise of cryptocurrencies and artificial intelligence is fueling a massive demand for data centers. Moody’s, a leading credit ratings agency, predicts that data center capacity will need to more than double by 2028 to keep up with the growing need. This is due to increasing cloud services, AI-related requirements, and the ever-expanding digital economy.
Data center real estate investment trusts (REITs) are poised to benefit from this booming demand. Moody’s highlights two REITs that are particularly well-positioned: Digital Realty (DLR) and Equinix (EQIX). These companies boast impressive longevity, strong relationships with tech giants like Amazon, Google, and Microsoft, and diverse client bases.
What Makes Digital Realty and Equinix Stand Out?
- **Long Track Record:** Both companies have been around for over 20 years, allowing them to cultivate strong relationships with major tech players.
- **Diversified Client Base:** They don’t rely solely on a handful of large companies, providing greater stability and revenue streams.
- **Global Presence:** With data centers worldwide, they’re well-positioned to meet privacy regulations in various locations.
- **Growing Revenue:** Both companies are seeing substantial revenue growth, particularly in the Asia Pacific region.
Beyond Digital Realty and Equinix, Moody’s also mentions other REITs investing heavily in data centers, including:
- American Tower Corporation (AMT), which acquired CoreSite in 2021.
- Prologis (PLD), planning to build 20 new data centers in the next five years.
- Iron Mountain Incorporated (IRM), which saw its data center revenue increase to 10% in Q1 2024.
As the demand for data centers continues to soar, these REITs are likely to see significant growth in the coming years. 📈
