Digital Realty Trust announced the expansion of its Azure ExpressRoute locations, enhancing its partnership with Microsoft and potentially increasing its connectivity offering. Over the past week, the company's shares rose by 2.3%, aligning with the broader market's gain of the same percentage. While the market was buoyed by positive earnings from tech stocks, Digital Realty's recent client and service announcements likely added some weight to this gain, reinforcing its strategic positioning within the tech infrastructure space. This development in high-security and low-latency connections could bolster Digital Realty's appeal to enterprises seeking hybrid IT solutions.

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The recent news of Digital Realty Trust's expanded Azure ExpressRoute locations may enhance its competitive edge in the tech infrastructure space. This collaboration with Microsoft could drive increased client interest in Digital Realty's services, potentially boosting revenue growth in key segments. Over the past five years, the company has achieved a total return of 21.62%, including dividends. While this longer-term performance is substantial, in the last year, Digital Realty has underperformed the US Specialized REITs industry, which returned 9.4%.

The announcement might positively influence revenue and earnings forecasts, as enhanced high-security and low-latency connections appeal to enterprises seeking hybrid IT solutions. Despite this, analysts expect Digital Realty's profit margins to decline to 9.5% by 2028, affecting earnings growth expectations, which could reach US$701.6 million from US$561.77 million currently. The recent share price of US$148.89 represents a 20.1% discount to the analysts' consensus price target of US$186.35; however, disagreement among analysts suggests caution. The company's focus on AI solutions and an expanded development pipeline could fuel future growth, but ongoing challenges such as competition and regulatory changes must be managed effectively.

Explore Digital Realty Trust's analyst forecasts in our growth report.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NYSE:DLR.

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