U.S. data center REITs gain from AI buildout resistance

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Highlights

PwC projects U.S. annual data center spending to rise from $800 billion in 2026 to $1.8 trillion by 2050, despite growing regulatory and community opposition.
Existing U.S. data center REITs, such as Equinix ($102 billion market cap, 37% YTD gain), Digital Realty Trust ($71 billion, 23% YTD) and Iron Mountain ($34.7 billion, 42% YTD), beat Q2 guidance and raised full-year outlooks amid tightened supply.
Analysts argue limited new supply and moratoriums support pricing and valuation for established data center REITs, strengthening double-digit earnings growth and sustained 2–3% dividend yields.

Policy resistance shifts supply outlook

As reported by CNBC, protests are spreading across the United States as hyperscalers expand data center capacity for AI workloads, with critics pointing to heavy land use, high electricity and water consumption, and noise. The political debate is expected to intensify ahead of the midterm elections, and a recent NBC News poll finds that 69% of respondents oppose the construction of AI data centers in their area.

There are already more than 4,700 data centers nationwide, and that number is expected to rise sharply. PwC projects annual data center spending will increase to $1.8 trillion in 2050 from about $800 billion in 2026, while some states are moving to restrict or ban construction and New York already has a moratorium in place.

Mizuho analyst Vikram Malhotra says in a Sept. 1 note that political and community pushback could delay new projects but benefit existing data center REITs by reinforcing pricing power as computing demand keeps expanding. The National Association of Real Estate Investment Trusts says data center REITs account for 13% of the total U.S. REIT market capitalization of $1.5 trillion, and public REITs own about 275 data centers in the country, less than 10% of owner-operated and leased facilities.

Established operators seen holding an advantage

Three data center stocks are in the FTSE Nareit Equity REITs Index, Digital Realty Trust, Equinix and Iron Mountain. Equinix is the largest with a market value of about $102 billion, a 1.99% dividend yield and a gain of roughly 37% year to date; the company recently signed a deal with Nvidia and in July reported second-quarter adjusted funds from operations above expectations while raising full-year guidance.

Digital Realty Trust has a market capitalization of $71 billion, yields 2.59% and is up more than 23% in 2026. Iron Mountain has a $34.7 billion market cap, a 2.96% dividend yield and a 42% rise this year, and both companies also report second-quarter adjusted FFO or AFFO above expectations and raise full-year guidance.

Analysts say the investment case remains mixed but favorable for established operators. Wells Fargo Investment Institute analyst Amanda Martinez says limits on new supply can lift the value of existing capacity, especially for owners with permitted development sites and secured power, although restrictions and moratoriums can also slow timelines and increase costs.

Green Street analyst David Guarino is bullish on Equinix and Digital Realty, arguing their size, land banks and development pipelines allow them to shift toward other markets when resistance emerges. He favors Equinix because accelerating AI inference workloads could benefit operators focused more heavily on lower-latency facilities near population centers.

Hoya Capital Real Estate President Alex Pettee also sees stronger supply-demand dynamics for data center REITs, even if individual projects can be hurt by moratoriums. He says the shares are not cheap relative to other REITs, but they remain attractive within the broader AI trade because they offer double-digit earnings growth, tangible infrastructure assets, recurring contractual revenue and dividend yields of roughly 2% to 3%.

SB Energy’s planned IPO spotlighted the execution risks surrounding the AI data center boom, including construction delays, cost overruns, and long grid interconnection timelines. Our earlier coverage also noted that rising public opposition could translate into tougher permitting and political headwinds, even as demand for AI infrastructure and long-term customer contracts remains strong.

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