Digital Realty CEO says AI slowdown won't halt data center demand

by@CNBC

Summary

Digital Realty CEO Andrew Power has assured investors that a potential slowdown in AI development will not spell disaster for the data center real estate market. Despite recent declines in stock prices for major data center REITs like Digital Realty following warnings from AI companies about reducing advancements, Power emphasized that demand for data center capacity remains robust, primarily driven by ongoing growth in cloud computing. McKinsey reports suggest that AI could account for up to 70% of global data center capacity demand by 2030, necessitating nearly $7 trillion in capital investment. However, Power highlighted that the infrastructure needs are still strong across various markets, which have been experiencing demand outpacing supply for several years.

Tokens

$DLR$BX$BLK$KKR

Analysis

JLL: JLL is a global real estate services and investment management firm that provides end-to-end advisory for data centers. Its global head of data center research and strategy explained that future growth will stem primarily from AI inference and broader business adoption rather than solely new model training. The firm noted sustained institutional interest in the sector from major investors. KKR: KKR is a global investment firm focused on private equity and infrastructure opportunities. It is highlighted for its high-conviction approach to data center investments, supporting analyst views on the sector's resilience. BlackRock: BlackRock is a major global asset manager with extensive institutional investment activities. Along with peers, it is cited for its ongoing strong positioning in the data center space amid discussions of evolving AI demand patterns. Blackstone: Blackstone is a leading alternative asset manager with significant activity in real estate and infrastructure investments. It is identified among institutional players maintaining high conviction in data center real estate despite short-term stock reactions to AI-related headlines. Andrew Power: Andrew Power serves as CEO of Digital Realty and leads its strategy in the data center sector. In response to warnings about AI development pace, he emphasized that substantial cloud computing growth and non-AI digital demands continue to drive the business. He highlighted the company's preparation through diversified funding and a strong balance sheet to navigate market fluctuations. Digital Realty: Digital Realty is a global data center real estate investment trust that owns, develops and operates facilities supporting cloud, enterprise IT and internet services. Its CEO addressed recent market concerns by noting that calls for an AI slowdown among major developers do not signal a complete halt to related infrastructure demand. The company operates across multiple key markets where customers compete for limited space amid ongoing digital transformation needs. Demand Drivers: Hyperscalers continue to allocate capacity across both commercial cloud operations and AI workloads, sustaining broad infrastructure requirements beyond any single technology focus. Adoption Trends: Widespread daily use of AI tools by businesses and individuals remains limited, providing substantial runway for increased adoption and associated data center needs even if new model development slows. Investment Sentiment: Major institutional investors maintain strong conviction in data center real estate, viewing the sector as resilient despite market volatility tied to AI news.

Categories

techai
View Original Tweet