Forget Tech Stocks: This Real Estate Play Is Cashing In on AI

Nvidia stock is up 750% over the past three years, while this non-tech AI stock is "only" up around 55%.Nvidia (NVDA +0.94%), a maker of high-power computer chips, is the poster child of the artificial intelligence (AI) revolution. Wall Street has pushed the stock sharply higher, as the AI opportunity currently seems unlimited. That enthusiasm probably won't last, if Wall Street history is any guide. Which is why you may be better off buying Digital Realty (DLR 0.73%) as your long-term AI play. What does Digital Realty do? Digital Realty is a real estate investment trust (REIT) that owns data centers. The business model is more complex than that of a traditional property-owning REIT, but the basic premise is the same. Digital Realty leases out space in its properties to tenants. That said, what gets housed in a data center is really just a lot of computers. Image source: Getty Images. This is important for artificial intelligence because AI is really just algotithms running on lots of compute power. Nvidia's chips run AI, but those chips have to live somewhere. That somewhere is usually a data center of some type. Digital Realty is increasingly leaning in to this developing niche, adopting technology that will make it easier for companies to house their AI tech in its properties. There's more opportunity than you may think While there's no telling what company will eventually lead the AI race, it is pretty clear that AI will have to live somewhere. Right now, investors think the winner is Nvidia, which is why the stock is up 750% over the last three years. By contrast, Digital Realty is "only" up about 55%. That's impressive, but it clearly isn't seeing the same enthusiasm as more direct AI plays. ExpandNYSE: DLRDigital Realty TrustToday's Change(-0.73%) $-1.29Current Price$175.61Key Data PointsMarket Cap$60BDay's Range$174.73 - $177.7652wk Range$129.95 - $184.79Volume52KAvg Vol2.1MGross Margin25.35%Dividend Yield2.78% Only, there's a longer-term picture here to consider. AI will always need to live somewhere, and each new AI-related customer increases cash flow, supporting Digital Realty's 2.7% yield and expanding its dividend-paying ability. That's step one. However, many of the AI industry's leaders are building their own data centers. Digital Realty is a logical acquirer of those data centers if, perhaps when, the companies that built them look to sell. That's step two. And it means that, even if Wall Street sours on the AI trade, Digital Realty could still see years of growth ahead for its pick-and-shovel AI business. To be fair, Digital Realty's stock price has handily outperformed the average REIT. So there's some AI hype built into the shares. However, if you look at the risk-versus-reward profile of AI stocks, it will likely appeal to more conservative investors who want to add some exposure to this odd sector.Read NextDec 5, 2025 •By Marc GubertiIs There a Massive Opportunity Ahead for Digital Realty Trust Stock?Nov 10, 2025 •By Reuben Gregg BrewerThis Real Estate Company Is Becoming a Modern-Day Shovel-Seller to the AI Sector. Here's Why Investors Should Pay Attention.Nov 10, 2025 •By Matt DiLallo2 Reasons Digital Realty Trust Stock Could Soar in 2026 and BeyondNov 3, 2025 •By Justin PopeShould You Buy Digital Realty Trust Stock Right Now?Jun 26, 2025 •By Eric VolkmanWhy Digital Realty Trust Stock Got Rocked TodayFeb 13, 2025 •By Motley Fool TranscribingDigital Realty Trust (DLR) Q4 2024 Earnings Call TranscriptAbout the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedDigital Realty TrustNYSE: DLR$175.61 (0.73%) $1.29NvidiaNASDAQ: NVDA$189.67 (+0.94%) $+1.77*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.