Data Center REITs

This basket targets the infrastructure backbone powering the AI revolution through 17 names with an effective N of 14.1, spanning real estate investment trusts, former bitcoin mining operators repurposed for high-performance computing, and technology hardware providers. The holdings concentrate exposure across industrial and specialized real estate for data center development, power-intensive facilities, and server manufacturing, with top positions in Prologis (PLD) at 9.3 percent, Cipher Digital (CIFR) at 9.3 percent, and Dell Technologies (DELL) at 9.2 percent. The investment logic centers on explosive demand for data center capacity driven by hyperscale AI workloads: global data center capex is projected to approach $1 trillion in 2026, with AI infrastructure expansion pushing the AI data center market from roughly $22 billion to nearly $198 billion by 2035 at a 27 percent CAGR, as hyperscalers commit hundreds of billions in spending and vacancy rates in core markets remain near record lows amid multiyear power and grid constraints.

Key risks include prolonged power shortages and transmission delays that could constrain new builds, escalating construction costs from tariffs or supply chain pressures, and potential oversupply in non-primary markets if AI spending decelerates or inference workloads shift demand patterns. Execution risks around large-scale pivots and capital-intensive development also apply, particularly for names transitioning business models. The highest-conviction position is PLD, given its $25 billion-plus pivot into AI-oriented data centers leveraging 5.7 gigawatts of secured or advanced power capacity, 14,000 acres of development-ready land, and established hyperscaler relationships that position it to capture both hyperscale leasing and infill opportunities in population centers for low-latency inference, all while maintaining a fortress balance sheet amid sustained tailwinds from AI buildout.