May 1 (Reuters) - Real estate investment trust Iron Mountain IRM.N raised its annual earnings forecast on Thursday, betting on surging demand for its data center leases from businesses looking to adopt artificial intelligence technologies.

Rival Equinix EQIX.O, one of the largest data center REITs, also lifted its annual revenue projection earlier this week. The twin upgrades underscore growing appetite for digital infrastructure as businesses race to modernize IT systems and deploy generative AI tools.

"Our data center, digital and asset lifecycle management $(ALM.AU)$ businesses are driving strong double digit organic revenue gains and continue to have a long runway for growth," CEO William Meaney said.

The Boston, Massachusetts-based Iron Mountain expects annual revenue between $6.74 billion and $6.89 billion, above analysts' average estimate of $6.71 billion, according to data compiled by LSEG.

It also raised its forecast for annual adjusted funds from operations (AFFO) to between $4.95 per share and $5.05 per share, up from its prior range of $4.85 per share to $4.95 per share.

Funds from Operations (FFO) is a key metric of cash flow for REITs.

For the quarter ended March 31, the company posted revenue of $1.6 billion, slightly above estimates. AFFO rose 8% to $348 million, or $1.17 per share, as its data center, digital, and ALM segment grew more than 20% year-over-year.

Revenue from the company's traditional storage rental business increased 7% to $948 million.

Iron Mountain counts cloud service providers such as Oracle ORCL.N and Akamai Technologies AKAM.O among customers for its data center leases.

(Reporting by Meghana Khare in Bengaluru; Editing by Sahal Muhammed)

((Meghana.Khare@thomsonreuters.com;))