April 24 (Reuters) - Digital Realty Trust DLR.N raised its annual core funds from operations (FFO) forecast on Thursday, betting on strong demand for data center services, sending its shares up 2% in extended trading.

Companies have been investing heavily in developing artificial intelligence models to stay relevant in the competitive AI space.

Strong bookings and renewals from hyperscale customers are benefiting data center operators such as Digital Realty.

The company now expects annual core FFO to be in the range of $7.05 to $7.15 per share, compared to its prior outlook of between $7.00 and $7.10 apiece.

Analysts' estimations were at $7.02 per share, according to data compiled by LSEG.

"Robust demand across our key product segments drove strong leasing and acceleration in Core FFO per share growth in the first quarter," said CEO Andy Power.

The real estate investment trust leases out managed data centers to clients in sectors that range from cloud and information technology to social networking, communications and manufacturing.

Digital Realty forecasts its full-year 2025 revenue to be between $5.83 billion and $5.93 billion, the midpoint of which came in line with analysts' average estimate of $5.88 billion.

The Austin, Texas-based company posted revenue of $1.4 billion for the quarter ended March 31, compared with estimates of $1.43 billion.

Adjusted FFO — a key cash flow measure for REITs — came in at $1.77 per share in the first quarter, from $1.67 each in the previous year.

(Reporting by Priyanka.G in Bengaluru; Editing by Tasim Zahid and Alan Barona)

((Priyanka.G@thomsonreuters.com))