Stock Strategist: Digital Realty Is Our New Favorite Data Center

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist Digital Realty Is Our New Favorite Data Center It's the first one we'd look to in another market sell-off. [tab_bar] by Matthew Dolgin, CFA | 5/4/2020 5:30:00 PM March brought a shakeup to the data center industry, and it wasn’t caused by the economic shutdown that resulted from the COVID-19 pandemic. Rather, the new dynamic was brought on by the completion of Digital Realty’s [DLR]( acquisition of Interxion. We’ve considered the effect that the pandemic will have on data centers, and we’ve determined that the answer is: not much. While data centers won’t be immune to some of the problems and inconveniences that come with the shutdown--such as tenants whose businesses may fall apart in the current economy or delays in bringing additional capacity on line--we expect the impact on our fair value estimates from those factors will be minimal. Additionally, greater data center needs of major tenants that are now accommodating workforces that largely work from home and communicate electronically should ultimately offset these headwinds. Data centers’ biggest customers tend to be cloud providers, other hyperscale customers (such as media and social media companies), and network service providers, and we expect all those customers to see increased activity on their platforms and over their networks in this environment. The expansion of their data center presence thus may need to be accelerated, though we see that as a longer-term move rather than something that will affect 2020 results. To read more, click [here](. Sponsored Links [Buy a Link Now]( Podcast: Investing Insights From Morningstar.com Listen to a roundup of the latest videos featured on Morningstar.com [in this podcast]( available through iTunes. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio](. Search Most Recent Articles [10 Questions That Should Be Asked at Berkshire's Annual Meeting]( [How to Stay Disciplined (and Why It's Important Now)]( [Gold Shares or Bullion as Portfolio Diversifiers?]( Latest Analyst Reports [John Bean Technologies]( [Kilroy Realty]( [Coca-Cola Femsa]( [Hubbell]( [Starbucks]( ABOUT OUR EMAIL TO UNSUBSCRIBE this email address to the Stock Strategist newsletter, please click "reply" and then click "send." This will unsubscribe only this email address to this specific newsletter. All subscription changes will take effect within one business day. Replies are not read by individuals, so please do not use this for queries about Morningstar.com. If you have questions about Morningstar.com or your membership, send a note to [joe@morningstar.com](mailto:%20joe@morningstar.com). ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2020. Morningstar, Inc. 22 West Washington Chicago, Illinois, 60602 All rights reserved.