Digital Realty Trust Inc. (NYSE: DLR) stock traded higher Friday after BTIG raised its price forecast on the data center real estate investment trust, citing accelerating demand for AI infrastructure and a growing development pipeline.

BTIG Sees Data Center Demand Accelerating

BTIG analyst Thomas Catherwood maintained a Buy rating on Digital Realty and raised the price forecast to $220 from $215. The firm said evidence from hyperscaler spending, cloud growth, utility backlogs and NVIDIA Corp. (NVDA) results points to stronger data center demand.

Hyperscaler capital spending remains a major tailwind. Amazon.com Inc. (AMZN), Alphabet Inc.'s Google (GOOGL), Meta Platforms Inc. (META) and Microsoft Corp. (MSFT) spent about $165 billion combined in the second quarter, up roughly 89% from a year earlier. BTIG expects elevated spending to support demand for third-party data center capacity.

Cloud growth is also strengthening the case. BTIG said AI workloads are moving from experimentation into production, driving higher cloud consumption and increasing demand for data center capacity.

Digital Realty Pipeline Offers Growth Runway

BTIG highlighted Digital Realty's $20.2 billion active development pipeline, which grew 22% sequentially and 126% year over year. The pipeline was 54% leased, leaving about $1 billion of potential incremental annualized revenue at Digital Realty's share beyond its existing backlog.

The analyst also pointed to Digital Realty's recently acquired 1,440-acre site in De Soto, Kansas. The property could eventually support up to 2 gigawatts of utility capacity, with an initial 600 megawatts expected to become available in early 2028.

BTIG raised its 2026 adjusted funds from operations estimate by 5 cents to $7.16 per share and lifted its 2027 estimate by 4 cents to $8.02. The new $220 price forecast reflects about 27.5 times BTIG's 2027 AFFO estimate.

BTIG sees Digital Realty's recent pullback as a buying opportunity as the fundamental backdrop for data centers strengthens.

The stock has retreated 7.3% after its gains were concentrated in the first four months of the year. The firm called the pullback a "compelling re-entry point".

DLR Price Action: Digital Realty Trust shares were up 1.48% at $186.51 at the time of publication on Friday, according to market data.