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Digital Realty (DLR) Enhances IBM Cloud Capabilities in Sydney

Zacks Equity Research

Digital Realty Trust, Inc. DLR recently announced the expansion of IBM Cloud's Direct Link access and capabilities in Sydney. The move will likely speed up the hybrid cloud adoption for the company’s local customer base.

Specifically, the IBM Cloud Direct Link Dedicated Hosting service can now be accessed by Australian customers through the company’s 3.5-hectare data-center campus on Templar Road in Erskine Park. Customers can benefit from the new low-latency service that offers high-speed access to the IBM Cloud in Sydney with speeds up to 10 Gbit/s.

Also, with the IBM Cloud data center being collocated on the Digital Realty campus in Sydney, latency is reduced for high-performance use cases. Through utilization of the IBM Cloud Direct Link Connect, customers have the scope to establish virtual connections, thereby strengthening the value of hybrid applications supported in the company's data centers.

Notably, data-center REITs will likely keep witnessing a boom market with growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure. Also, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. These factors are anticipated to give significant impetus for growth to data-center REITs, including Digital Realty, Equinix, Inc. EQIX, CyrusOne Inc. CONE and CoreSite Realty Corporation COR.

Specifically, robust fundamentals of the data-center market will likely help Digital Realty ride on its growth curve. The company remains well poised to bank on it through accretive acquisitions and development efforts.

Moreover, the company presently has nine locations globally, which can be used for low-latency colocation, privately linked to IBM Cloud through the IBM Direct Link Dedicated Hosting offering, which is encouraging. Nonetheless, aggressive pricing pressure is likely to prevail in the upcoming period. In addition, the company has a substantial debt burden.

Digital Realty currently carries a Zacks rank #3 (Hold). Shares of the company have gained 12.4%, while its industry has rallied 22.2%, year to date.



You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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