In a move to shield America’s steel (HVH25) and aluminum (ALK25) industries from unfair trade practices, President Donald Trump has doubled down on tariffs. Earlier this month, he signed proclamations aimed at closing loopholes and eliminating exemptions, ensuring that foreign competitors face a full 25% tariff on steel and levying an elevated 25% tariff on aluminum.

While this move is designed to bolster American manufacturing, it could also send shockwaves through industries reliant on these metals. According to Jeff Currie, chief strategy officer of energy pathways at Carlyle, these tariffs could spell serious trouble for the data center industry by exacerbating an already critical shortage of transformers, the essential components that regulate electricity flow. Currie explained that transformers are essentially “big chunks of metal,” meaning any disruption in steel and aluminum supply chains will further choke production.

With demand for artificial intelligence (AI)-driven cloud computing surging, delays in transformer availability because of these new tariffs could slow down data center expansion at a time when Big Tech needs it most. Keeping all these factors in mind, one company that appears particularly vulnerable is Digital Realty Trust (DLR), a leading real estate investment trust (REIT) that owns and operates data centers around the world. So, given the high stakes, let’s take a closer look at this data center stock.

About Digital Realty Trust Stock

Texas-based Digital Realty Trust (DLR) operates a comprehensive suite of data centers, colocation, and interconnection solutions. Through its global platform, PlatformDIGITAL, the company provides a secure hub for data exchange. With a footprint spanning 300-plus facilities across more than 25 countries, the company has emerged as a leading player in the data center sector.

Presently valued at around $56.1 billion by market cap, shares of this data center REIT have returned roughly 26.5% over the past year, almost mirroring the broader S&P 500 Index’s ($SPX) gains of 22.8% during the same stretch. However, 2025 has taken a different turn. While the broader market pushed ahead with a 4.5% YTD gain, DLR has dipped 3.6% so far this year.

DLR may have struggled on a YTD basis, but its valuation remains steep. The stock trades at a lofty 80.82 times non-GAAP forward earnings and 9.86 times sales. 

A Closer Look at Digital Realty’s Q4 Performance

Digital Realty’s fourth-quarter earnings, published on Feb. 13, painted a mixed picture. Revenue climbed 5% year-over-year to $1.4 billion but still fell short of Wall Street’s forecast figure. However, the company delivered a bright spot with core funds from operations (FFO) of $1.73 per share, which not only topped analyst estimates by roughly a 1.8% margin but also marked a 6.1% annual increase, showcasing resilience in its financial performance.

Moreover, Digital Realty closed out the fourth quarter with impressive leasing activity, securing total bookings projected to generate $100 million in annualized GAAP rental revenue. Beyond new leases signed, the company also locked in renewal leases worth a staggering $250 million in annualized cash rental revenue, reinforcing its position in the data center market.

Looking forward to fiscal 2025, management forecasts total revenue to range between $5.8 billion and $5.9 billion, while adjusted EBITDA is anticipated to land between $3.1 billion and $3.2 billion. Additionally, the company expects core FFO per share on a constant currency basis for the entire year to arrive between $7.05 and $7.15.

Meanwhile, analysts tracking Digital Realty project the company’s FFO to rise 5.2% year over year to $7.06 per share in fiscal 2025 and grow another 8.8% to $7.68 per share in fiscal 2026.

What Do Analysts Expect for Digital Realty Trust Stock?

Despite the mixed Q4 performance alongside looming challenges of Trump’s steel and aluminum tariffs, Wall Street remains somewhat optimistic about DLR stock, maintaining a consensus rating of “Moderate Buy” overall. Of the 26 analysts offering recommendations, 18 advise a “Strong Buy,” one suggests a “Moderate Buy,” six advocate “Hold,” and the remaining one maintains a “Strong Sell.”

The average analyst price target of $189.20 indicates potential upside of nearly 11.6% from current levels, while the Street-high target of $220 signals that the stock can rally as much as 29.7% from here.