There’s a big trend in the technology space that has huge implications for real estate investment trusts (REITs). No, it’s not online shopping, at least not directly. It’s the much broader shift to the cloud, where computing power is centralized in giant facilities and accessed remotely by companies and their customers. Digital Realty (NYSE: DLR) is at the heart of this transition.
Here are five things to consider before you jump in on this long-term real estate trend. How you feel about them could help determine if Digital Realty stock is a buy.
Amazon‘s cloud business had revenue of $12.7 billion in the fourth quarter of 2020, making it one of the biggest names in the space. That number, however, was up a huge 28% year over year. Alphabet, another giant in the space, saw its cloud business grow 47% year over year. But Alphabet lost money in the space because it is continuing to invest heavily in the sector’s growth. Its results clearly show it is achieving its growth ambitions.