Goldman Sachs analyst James Schneider initiated coverage on Digital Realty Trust, Inc. (NYSE:DLR) with a Buy rating and a price target of $175.

The analyst says he observes robust secular demand trends, propelled by AI and hyperscaler demand, alongside favorable cyclical supply conditions driven by utility and construction capacity constraints.

Although the company was heavily leveraged for much of 2023, the analyst believes its improved capital position following the Blackstone Inc. (NYSE:BX) joint venture has positioned it well for the next two years.

Schneider anticipates Digital Realty surpassing key Street estimates across multiple metrics, such as new lease signings and pricing on lease renewals in the coming quarters.

The analyst writes that the outsourced datacenter market has tightened significantly in the past year, due to strong secular demand from hyperscalers and a surge in AI-driven compute needs. He expects pricing dynamics to remain elevated despite some moderation.

Last week, JP Morgan upgraded the stock to Overweight (from Neutral) and raised the price target to $175 from $150.

Also, BMO Capital boosted the rating to Outperform (from Market Perform) and increased the price target to $170 (from $144).

DLR stock has gained over 32% in the past one year. Investors can gain exposure to the stock via Pacer Data & Infrastructure Real Estate ETF (NYSE:SRVR) and IShares U.S. Digital Infrastructure And Real Estate ETF (NYSE:IDGT).

Price Action: DLR shares are up 0.03% at $152.09 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.