Concerns about a potential slowdown in artificial intelligence advancement sparked declines in data center stocks, including shares of major real estate investment trusts Digital Realty and Equinix. Industry forecasts project that AI could represent approximately 70% of global data center capacity demand by 2030, with total capital investment needs reaching nearly $7 trillion and real estate comprising about $3 trillion of that total over five years.
Digital Realty CEO Andrew Power stated in an interview that pledges from AI companies Anthropic, OpenAI, and xAI to moderate development pace would not halt progress in the sector or eliminate underlying real estate requirements. Power emphasized that substantial digital transformation activities unrelated to AI continue to drive demand, and that hyperscalers have previously deprioritized commercial cloud growth to allocate resources to AI initiatives. He noted that certain geographic markets, including Northern Virginia, Dallas, Chicago, and international locations such as Singapore, Tokyo, Frankfurt, and Amsterdam, experience persistent supply shortages relative to customer demand.
JLL analyst Andrew Batson noted that a slowdown in AI model training would not directly impact the physical infrastructure needs supporting AI deployment, as the primary growth opportunity lies in inference—the widespread adoption of existing tools by businesses and individuals. With only an estimated 1 in 4 Americans using AI daily, significant expansion potential remains for data center demand regardless of model release timelines. Batson highlighted substantial institutional investment commitments from major firms including Blackstone, BlackRock, and KKR as indicators of continued industry confidence.
Power stated that Digital Realty’s development pipeline totaled $20 billion under construction, compared with $10 billion at the end of 2023, and that the company has strengthened its financial position through diversified funding approaches and balance sheet optimization. He characterized the current environment as manageable rather than existential for the data center real estate sector.
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