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Potential AI slowdown not ‘end of the world’ for real estate
CNBC • • business
Key Points:
- Calls for a slowdown in AI development have recently impacted AI-related stocks, including major data center REITs like Digital Realty and Equinix, due to concerns about reduced demand.
- AI is expected to drive about 70% of global data center capacity demand by 2030, with an estimated $7 trillion capital outlay needed, including $3 trillion in real estate investment over the next five years.
- Digital Realty CEO Andrew Power emphasized that digital transformation and cloud computing growth remain strong drivers of demand, and not all markets will be equally affected by any AI development slowdown.
- Analysts note that data center growth will be driven largely by AI inference and adoption rather than model training, with significant potential for increased usage and continued institutional investment from firms like Blackstone and BlackRock.
- Digital Realty has prepared for market fluctuations by diversifying funding sources, maintaining strong liquidity, and expanding its development pipeline to $20 billion, signaling confidence in long-term demand despite short-term stock volatility.
