Digital Realty Trust vs. Equinix: Which Real Estate Stock Is a Better Buy in 2026?

As data processing needs accelerate in 2026, many investors are deciding whether Digital Realty Trust (NYSE:DLR) or Equinix (NASDAQ:EQIX) is the better buy for long-term growth in the technology infrastructure space.

Digital Realty Trust provides massive data center solutions primarily for cloud and information technology service providers. Equinix operates a vast ecosystem that prioritizes interconnection, enabling more than 10,500 customers to connect their networks. Both companies operate as Real Estate Investment Trusts, offering exposure to essential technology through physical property ownership.

The case for Digital Realty Trust

Digital Realty Trust sells colocation and interconnection solutions to a global customer base spanning finance, healthcare, and energy. It operates 309 data centers and recently expanded by acquiring a majority stake in several large data centers in Northern Virginia. To capitalize on its expanding development pipeline, the company recently completed a 12.3 million share secondary equity offering and acquired 1,440 acres near Kansas City.

For the fiscal year 2025, revenue reached nearly $6.1 billion, representing a 10.0% increase over the previous year. Net income for the period was nearly $1.3 billion, which was a significant increase from the roughly $602.5 million reported in the prior year. This resulted in a net margin of approximately 21.4% for the fiscal year 2025.

As of its December 2025 balance sheet, the debt-to-equity ratio was roughly 1.1x. This metric measures total debt against shareholder equity, with a lower number typically indicating less reliance on borrowed funds. The current ratio, which measures the ability to cover short-term obligations with short-term assets, was approximately 4.5x. Free cash flow reached nearly $2.4 billion, representing the cash remaining after the company paid for capital expenditures. This liquidity supports the company's long-term real estate investing strategy.

The case for Equinix

Equinix manages 280 data centers across 36 countries, focusing on interconnection services that help enterprises deploy hybrid cloud environments. It serves a diverse group of customers, including Nvidia (NASDAQ:NVDA) and Cisco (NASDAQ:CSCO), with no single client accounting for more than 10% of total revenue. In 2026, the firm emphasized the deployment of artificial intelligence through several high-profile partnerships and the planned acquisition of Nordic operator atNorth.

During FY 2025, the company generated revenue of approximately $9.3 billion, a growth of nearly 5.9% compared to the prior year. Net income for the fiscal period was roughly $1.4 billion, rising from the $815.0 million earned in the previous fiscal year. This translated to a net margin of close to 14.6% for the year.

According to the December 2025 balance sheet, Equinix had a debt-to-equity ratio of roughly 1.6x. The current ratio was approximately 1.3x, suggesting a narrower margin for covering short-term liabilities than its peers. For the fiscal year 2025, free cash flow was negative at nearly $400.0 million. This figure reflects significant cash spent on capital projects, exceeding cash generated from operations, as the company continued to build out its global platform.

Risk profile comparison

Digital Realty Trust faces risks due to its reliance on third-party utility providers for power and connectivity. Grid constraints and price volatility can impact the uptime of its data centers. The company also faces the risk of facility obsolescence as rapid advancements in artificial intelligence infrastructure increase power density requirements. Integrating large acquisitions, such as those involving Blackstone assets, carries risks of hidden liabilities. Furthermore, with close to $18.6 billion in debt, the firm is sensitive to interest rate fluctuations.

Equinix addresses potential bottlenecks in the AI supply chain, where shortages of specialized semiconductors may delay server deployments for customers such as Amazon. Rising global energy costs and constrained power grids also threaten its expansion capacity in high-demand regions. The company remains a target for sophisticated cybersecurity threats, including those driven by artificial intelligence. Equinix must also manage the complex integration of international acquisitions. Finally, ongoing litigation and securities class-action investigations could consume management resources and damage the firm's reputation.

Valuation comparison

Equinix trades at a lower forward P/E of nearly 58.9x based on future earnings estimates, while Digital Realty Trust carries a higher P/S ratio of 10.3x.

Sector benchmark uses the SPDR XLRE sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.

Which stock would I buy in 2026?

Digital Realty and Equinix are both giants in the world of interconnected data centers, though they offer different business strategies. Both are benefiting from the massive AI build-outs. So which one is a better investment?

Equinix is the premier global interconnection and colocation provider. That means it builds gigantic data centers full of fiber-optic cables and server racks, then rents out the space to thousands of customers. Its focus on connectivity rather than square footage helps it earn higher margins. However, its valuation is high relative to its earnings, with much of its predicted upside already priced in.

Digital Realty takes a different approach. As a real estate investment trust (REIT), it owns data center campuses and leases them to major customers such as Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) under long-term contracts. Those leases help generate predictable cash flow, and because REITs must distribute at least 90% of their taxable income as dividends, shareholders receive a higher yield than they would from Equinix.

If I had to choose one of these companies, I would select Digital Realty because its REIT structure and higher dividend make it an appealing source of passive income. But considering both companies' premium valuations, I would prefer to build a position gradually rather than buy in all at once.

Pamela Kock has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Cisco Systems, Digital Realty Trust, Equinix, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.