Digital Realty (DLR): Can a Data Center Landlord Become the Control Panel for Enterprise AI?

On September 15, Digital Realty (DLR) unveiled ServiceFabric MCP, a software layer that enables AI agents to design, monitor and troubleshoot network connections across more than 800 data centers, including those owned by third parties. This move positions the real estate company as a potential "control panel" for enterprise AI. The launch came after the company reported a strong second quarter on July 23, where Core FFO per share, the company's preferred earnings metric, rose to $2.13 from $1.87 a year earlier.

ServiceFabric MCP handles four key functions: designing and provisioning connections, spotting capacity and monitoring live network health, managing access through OAuth 2, and directing troubleshooting to agents with links to chat and monitoring tools. The software is designed to be open by nature, allowing customers to operate in Digital Realty data centers or on other platforms, and supporting multiple AI models.

IDC research VP argues that public cloud interfaces alone cannot provide enterprises with sufficient control over data movement and policy, favoring providers that combine global reach with programmable interconnection.

Digital Realty runs the system on its own AI workloads, and See All AI, a medical imaging developer, utilizes the Boston campus and ServiceFabric to move large datasets securely and quickly. The company's financial performance has been robust, with renewal leases signed at 25.4% higher cash rates in the second quarter, resulting in a $1.9 billion backlog of annualized base rent at 100% occupancy. Management has raised its 2026 Core FFO per share outlook to $8.15 to $8.20, indicating confidence in future revenue growth.

However, the software's potential has not yet been fully realized. Digital Realty describes ServiceFabric MCP as an "emerging standard," and the company has not disclosed a specific dollar amount that the new layer could add to revenue. The announcement does not quantify the software's impact, as it is positioned as the first programmable surface of a larger architecture that could expand into space, power, and inventory.

Until customers pay for the layer, it remains a promising concept rather than a revenue-generating asset.

On the downside, Digital Realty carries a substantial debt load of about $18.6 billion as of June 30, 2026. The company's 2026 development spending outlook, net of partner contributions, ranges from $4.25 billion to $4.75 billion, assuming new long-term debt at 4.5% to 5.5%. To fund growth, the company sold roughly 13.5 million shares this year, adding about $2.5 billion in market capitalization.

The Core FFO per share for Q2 stood at $2.65, including a $188 million net promote, which reduces the figure to $2.13. Hedge funds have increased their holdings in Digital Realty to 73 from 46 in the previous quarter, indicating growing interest from institutional investors. The forward P/E ratio stands at 67.11, reflecting the steep price investors are paying for future earnings.