Digital Realty (DLR) Offers Access to Oracle Cloud FastConnect
Digital Realty DLR recently announced that it will enable connectivity to an Oracle Cloud Infrastructure (OCI) FastConnect point-of-presence (PoP) in the newly launched Oracle Cloud Chicago Region. The move is part of company’s efforts to capitalize on the rising demand for data centers amid the growing reliance on technology and acceleration in digital transformation strategies by enterprises.
Reflecting broader market concerns, shares of DLR lost 3.26% on Mar 1 normal trading session on the NYSE.
The new connectivity deployment in DLR’s 350 E. Cermak Road data center will benefit customers by offering a low-latency route into the Oracle Cloud Chicago Region. This will come with multi-cloud access from its global facilities through PlatformDIGITAL®, Digital Realty's global data center platform, ServiceFabric™, its recently launched orchestration platform and its various Connected Campus solutions.
Post the addition of Oracle Cloud Chicago Region, Digital Realty now has nine OCI FastConnect PoPs across four continents, which include Amsterdam, Frankfurt, Johannesburg, Los Angeles, London, Madrid, Marseille and Sao Paulo.
Per Chris Sharp, CTO at Digital Realty, “Our global customers can quickly establish access to the Oracle Cloud Region via ServiceFabric™, regardless of where they are located, bringing enhanced connectivity to customers and partners across the globe.”
In a similar move in January 2023, Digital Realty announced the deployment of PoPs at its data centers in Singapore, Hong Kong and Sydney by Hurricane Electric, the world's largest IPv4 and IPv6-native Internet backbone. The move extended their global relationship to the Asia Pacific (APAC) region.
With the move, Digital Realty's customers were able to connect directly to Hurricane Electric's extensive IPv4 and IPv6 network through 100GE (100 Gigabit Ethernet), 10GE (10 Gigabit Ethernet) and GigE (1 Gigabit Ethernet) ports. Moreover, without having to upgrade their last-mile network connection, customers were able to access a rich, connected data community with more than 4,000 customers in 53 metros across 27 countries on six continents.
The demand for high-performing data centers is expected to increase in the coming years, owing to the escalation in cloud computing, the Internet of Things and Big Data, and the rising demand for third-party IT infrastructure.
Growth in the artificial intelligence, autonomous vehicle and virtual/augmented reality markets is expected to gain pace over the next five to six years. Digital Realty is likely to capitalize on this upbeat trend, which will aid its long-term growth.
However, given the strong growth potential of the industry, intense competition from existing and new players in the space could prompt competitors to resort to aggressive pricing policies, making DLR vulnerable to pricing pressure. Also, rising interest rates add to the company’s concerns.
DLR currently carries a Zacks Rank #3 (Hold). Its shares have lost 7.7% in the past three months compared with the industry’s fall of 1.8%.
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Stocks to Consider
Some better-ranked stocks from the REIT sector are VICI Properties VICI, Alexandria Real Estate Equities ARE and Stag Industrial STAG, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is pegged at $2.10.
The Zacks Consensus Estimate for Alexandria Real Estate’s 2023 FFO per share stands at $8.94.
The Zacks Consensus Estimate for Stag Industrial’s 2023 FFO per share is pegged at $2.25.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Digital Realty Trust, Inc. (DLR) : Free Stock Analysis Report
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