Digital Realty (DLR - Free Report) recently inked a deal with The Shadowserver Foundation for supporting the latter’s data-center needs at Digital Realty's facility in Oakland, CA. The company’s Network Hub solution on PlatformDIGITAL™ will help the foundation strengthen its internet security.
According to Digital Realty chief technology officer Chris Sharp "With Network Hub on PlatformDIGITAL™, organizations can break through data gravity barriers to scale digital business.”
Notably, the Oakland data center of Digital Realty provides direct access to Silicon Valley and the capacity to support high-density deployments, offering agility and flexibility to assist customers meet their rising data-center requirements. The Oakland data center has access to more than 60 networks within Digital Realty's Bay Area Connected Campus and is well poised to support the foundation in streamlining its data-center network.
With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are witnessing a boom market. Furthermore, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years. Apart from these, data centers are poised to benefit from the heightening reliance on technology in wake of the coronavirus pandemic. As such data-center REITs, including Digital Realty, Equinix, Inc. (EQIX - Free Report) , CyrusOne Inc. (CONE - Free Report) and CoreSite Realty Corporation (COR - Free Report) , will keep witnessing significant demand.
Digital Realty is poised to benefit from this healthy market fundamental through accretive acquisitions, development and expansion efforts.During the first quarter, the company completed the acquisition of Interxion, a European provider of carrier and cloud-neutral colocation data-center services for a total consideration of $8.4 billion, including debt. The combined entity enjoys enhanced presence in major European metro areas, and its size and scale is expected to result in an efficient cost structure and superior EBITDA margins.
Such encouraging factors have helped Digital Realty’s shares gain 9.8% so far this year, as against the industry’s decline of 16.5%.
However, Digital Realty faces stiff competition from several data-center developers, owners and operators, many of which enjoy ownership of similar assets in locations same as the company. As the data-center market has the potential of further growth, these REITs remain under aggressive pricing pressure.
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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