HSBC: AI Model Slowdown Not Necessarily Negative for Traditional Data Centers, Expects Related REITs to Achieve 11%-12% CAGR in AFFO per Share from 2025-2028
HSBC analysis indicates that the proliferation of AI applications into enterprise and real business scenarios will continue to drive data center demand, rather than the iteration speed of cutting-edge models. Concurrently, power and regulatory constraints are causing slow release of new capacity, with the tight supply-demand situation expected to persist until 2027-2028. The report projects that even with rising interest rates, the drag on data center REITs' earnings growth will be limited, with related REITs' AFFO per share compound annual growth rate estimated at approximately 11% to 12% between 2025 and 2028, surpassing the historical average of the past five years.
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