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    Digital Realty Trust (DLR) Stock May Be A Bargain As AI Control Launch Raises The Stakes

    Simply Wall St·09/25/2026 01:32:54
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    Digital Realty Trust has ridden the data center and AI infrastructure story hard in recent years, and at around US$181 a share the question is whether the current valuation is still grounded in the cash the business can generate. With the stock now reflecting years of enthusiasm for digital infrastructure, investors are increasingly asking what the underlying cash flows really justify.

    • Over the past 3 years, Digital Realty Trust has delivered a 67.1% total return, which puts a lot of weight on whether the cash generation profile can support that kind of re-rating.
    • New offerings such as ServiceFabric Model Context Protocol and partnerships around private AI and subsea connectivity can shape expectations for longer term leasing activity, capital spending and ultimately the timing and durability of future cash flows.
    • What if you looked at Digital Realty Trust through its earnings instead? See why Digital Realty Trust's 88.6x P/E tells a different valuation story.

    The stock's next move may depend on whether the current share price lines up with what its cash flows suggest as an intrinsic value.

    If you want to stress test whether Digital Realty Trust's cash flow story still stacks up at US$181, it helps to compare it with other AI infrastructure plays using 84 AI infrastructure stocks.

    Is Digital Realty Trust Still Cheap on Cash Flow?

    The Discounted Cash Flow (DCF) model here uses Digital Realty Trust’s adjusted funds from operations and projects what those cash streams could be worth to shareholders today. On that basis, the last twelve months produced free cash flow of about $2.27b, and the forecast path assumes growing cash generation through the next decade rather than a flat or shrinking profile.

    These rising free cash flow estimates help explain why the DCF projections put Digital Realty Trust's estimated intrinsic value substantially above the current share price of $181.00. News that management lifted its 2026 Core FFO per share forecast after renewal leases were signed at higher cash rates points in the same direction, because it supports the idea that future cash flows could justify more than the market is currently willing to pay. Find out what Digital Realty Trust could be worth using our Discounted Cash Flow (DCF) estimate.

    The Digital Realty Trust Narrative: What Would Justify Today's Price?

    Narratives for Digital Realty Trust pick up where the DCF puzzle leaves off by spelling out the specific paths for growth, margins and earnings that would need to play out for the stock to be worth materially more or materially less than today’s price on Simply Wall St’s Community page. Instead of one output from a ratio or model, you see the future that number leans on, so you can watch in real time whether those assumptions continue to hold.

    One of the top community narratives on Digital Realty Trust: 19% undervalued

    "Digital Realty's record signed but not yet commenced lease backlog of about US$1.9b, plus a further US$410m of hyperscale leases signed in July..."

    Discover why this Narrative puts Digital Realty Trust at 19% undervalued.

    Before acting on Digital Realty Trust's valuation, one more factor deserves attention

    Digital Realty Trust’s potential on cash flows is only half the story, because Simply Wall St’s broader checks have also flagged areas of concern that could shift how you view the risk side of the equation. Take a closer look at 2 warning signs (1 major) before settling on a valuation.

    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.