Digital Realty CEO Andrew Power addressed recent concerns about a potential slowdown in artificial intelligence development and its impact on data center real estate. Following warnings from AI companies like Anthropic, OpenAI, and xAI, stocks of major data center REITs including Digital Realty and Equinix experienced declines. However, Power emphasized that these pledges to slow AI progress do not equate to an end of demand for data center infrastructure, pointing out that the digital transformation and cloud computing growth remain strong drivers that will continue to support the sector.

AI is expected to significantly increase data center demand, potentially accounting for about 70% of global capacity needs by 2030. This surge is driving substantial investment, with estimates from McKinsey and JLL projecting nearly $7 trillion in capital expenditures for data centers worldwide, including $3 trillion dedicated to real estate over the next five years. Despite recent stock market volatility tied to AI development concerns, Power highlighted that demand in key markets such as Northern Virginia, Dallas, Chicago, and major international hubs remains robust, with customers competing for limited space.

Analysts also see continued growth potential in data centers beyond the initial phase of AI model training, focusing on the expanding adoption of AI tools in daily business and consumer activities. Andrew Batson from JLL noted that although some AI model releases may slow, the broader rollout and integration of AI technologies into workflows could drive sustained demand for data center capacity. Institutional investors like Blackstone, BlackRock, and KKR maintain confidence in the sector, reflecting strong long-term investment sentiment despite recent headlines.

Power reassured shareholders that Digital Realty is well-prepared to navigate any market uncertainties, having strengthened its funding model and balance sheet. The company’s development pipeline has doubled to $20 billion since the end of 2023, supported by private capital and joint ventures to maintain liquidity and lower leverage. Power described the current environment as manageable rather than catastrophic, signaling confidence in Digital Realty’s strategy to capitalize on ongoing digital transformation and cloud computing trends alongside AI advancements.