3 Ways to Play the Data Center Land Grab

Key Points

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  • Data center demand remains strong, and REITs with a focus on AI hold ever-growing portfolios of high-value data center real estate.

  • Firms like Equinix and Digital Realty Trust have taken dominant positions operating hundreds of data centers around the world.

  • A broader ETF like DTCR can provide access to data center real estate investments with semiconductor stocks as a bonus.

Investor interest in the AI space continues to grow, with many focusing on AI infrastructure plays to meet the increasing demand for data centers or on semiconductor stocks building the components necessary for AI platforms to function. One potentially overlooked area that is vital to AI but not directly related to the technology itself is land. Electricity consumption from data centers alone in the United States could triple that of the entire nation of Ireland by 2028, and generating that much power requires massive amounts of land.

If demand continues at its current rate, investors may expect an increasingly contentious battle for prime land used by data center developersā€”space that is open and accessible, with strong power infrastructure, not susceptible to natural disasters, and so on. Two real estate investment trusts (REITs) and an exchange-traded fund focused on data center real estate and development provide investors with exposure to this high-demand but underappreciated aspect of the AI boom.

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Equinix’s Data Center Strategy Positions the REIT for Continued Growth

Equinix Inc. (NASDAQ: EQIX) is a REIT specifically focused on data centers, operating more than 280 different centers around the world. Shares are up about 40% year-to-date (YTD) but have essentially plateaued since late April. One reason for this is that the company’s Q1 2026 results were, in some respects, not as impressive as analysts had predicted: revenue growth of 10% year-over-year (YOY), for instance, was not as robust as expected.

Still, there are plenty of reasons to be excited about Equinix and its advantageous position as data center demand grows. For one, recurring revenue is growing, as are adjusted EBITDA margin and adjusted funds from operations. Further, management raised full-year guidance on revenue and EBITDA in the latest report.

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Equinix is also positioned to boost its capacity dramatically going forward, with plans for capital expenditures of up to $4.1 billion in 2026 on 46 major new projects. Backlog and bookings are both up as well, demonstrating the company’s ability to appeal to a growing list of customers.

All of these signs point to future potential, and so it’s no surprise that Equinix has a strong appeal across Wall Street. 23 out of 29 analysts view the firm favorably and have assigned a Buy or equivalent rating.

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A Fast-Growing Data Center Dividend Yield Play

Digital Realty Trust Inc. (NYSE: DLR) takes a similar approach to Equinix, as it is a REIT that owns and operates data centers and provides colocation solutions. In terms of sales, its 16% YOY growth for Q1 2026 outpaced Equinix’s performance.

The firm also brought its total backlog to $1.8 billion during the quarter while achieving record interconnection bookings of $98 million. Management raised full-year guidance on funds from operations to between $8 and $8.10, representing growth of about 9% YOY at the midpoint.

As a REIT, Digital Realty is obligated to pay out a majority of its earnings as dividends, and itsDLR 2.6% dividend yield may appeal to investors while also outpacing Equinix on this metric. Like its larger rival, Digital Realty is favored by many analysts, as 21 out of 29 call DLR shares a Buy.

The firm also has upside potential of more than 10% according to its consensus price target, even after already returning more than 20% YTD.

A Data Center ETF, But Not a Pure-Play Investment

For investors not keen to pick individual names in the data center land grab, the Global X Data Center & Digital Infrastructure ETF (NASDAQ: DTCR) offers a convenient way to access multiple companies in a single investment. This ETF holds a portfolio of more than two dozen global firms with an interest in data center infrastructure.

DTCR has positions in Equinix and Digital Realty Trustā€”indeed, these are the two largest holdings in the portfolio by percentage, representing close to a quarter of the total basket. It supplements these with a collection of other data center REITs, semiconductor manufacturers, and digital infrastructure players.

Investors should note that DTCR is not a pure-play data center real estate bet, given its chip-maker holdings. This makes it suitable for those looking for a broader play on AI infrastructure, rather than a focus on land and property directly. Still, it provides a modest dividend yield of 0.7% as a bonus on top of YTD returns of about 50%. For an expense ratio of 0.50%ā€”somewhat higher than most passively managed funds, but perhaps worthwhile given the unique themeā€”investors can leave the portfolio management to someone else while reaping the rewards to be found in the fast-growing AI infrastructure space.

The article “3 Ways to Play the Data Center Land Grab” was originally published by MarketBeat.

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