If you're looking for the next big thing in infrastructure investing, data centers might be your answer. Goldman Sachs analyst Michael Ng thinks so, anyway. He just initiated coverage on three players in the space, arguing that the sector has "an attractive runway for growth" thanks to booming AI infrastructure spending and the relentless march of cloud migration.

The Coverage Breakdown

Ng launched coverage with three distinct calls. Digital Realty Trust Inc. (DLR) earned the coveted Buy rating with a $188 price target, making it Goldman's top pick in the space. Meanwhile, Equinix Inc. (EQIX) got a Neutral rating and $785 price target, and IREN Ltd (IREN) also received a Neutral rating with a $39 target.

Why Digital Realty Wins

Here's where it gets interesting. While both Digital Realty and Equinix operate primarily as colocation providers—essentially landlords for data center space—IREN is something different entirely: a crypto miner attempting to pivot into AI cloud services.

Digital Realty's appeal comes down to fundamentals. Ng expects "an extended period of revenue and profit growth," supported by a massive backlog, attractive releasing spreads that signal pricing power, and a whopping $6.4 billion (730 MW) of data center construction currently under development. That includes Digital Realty's share of joint ventures coming online in 2026. The analyst projects an 11% revenue CAGR and 12% EBITDA CAGR between 2026 and 2029.

The Equinix Question

So why isn't Equinix getting the same love despite its leadership position? Ng's reasoning centers on timing and scale. While Equinix should certainly benefit from AI spending, near-to-mid-term AI infrastructure investments are likely focused on model training—work that tends to favor large-scale wholesale colocation operators rather than Equinix's more distributed approach.

IREN's Wild Growth Story

Then there's IREN, which Ng describes as being in "hyper growth" mode. The numbers are eye-popping: revenues expected to surge from $501 million in 2025 to $3.8 billion in 2028, with EBITDA expanding from $270 million to $2.7 billion over the same period. The catalyst? A major data center deal with Microsoft Corp (MSFT).

Market Reaction

At publication time Thursday, the market seemed to like what it heard. Shares of Digital Realty Trust climbed 1.19% to $150.15, Equinix edged up 0.22% to $749.50, and IREN jumped 5.50% to $35.52.