Intel and Digital Realty Results Are Supportive of Multiple Holdings
Here's what we learned from both companies and why it leaves us optimistic in these areas.
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Let’s continue to connect the dots during earnings season, this time by canvassing what was revealed last night by Digital Realty Trust DLR and Intel INTC.
What we learned from both these companies supports multiple holdings in the The Street Pro Portfolio as it relates to AI, data center, data center construction, and AI PCs.
Digital Realty Trust
Data center real estate investment trust (REIT) company Digital Realty Trust posted strong overall leasing in the first quarter of $242 million, consistent with the record pace set in 2024. That led the company’s backlog of booked-not-billed leases to a new record of $919 million. Digital offers a few views when it comes to its backlog, including that its backlog of signed-but-not-commenced leases exceeded $1.3 billion at the end of the quarter and its 2026 backlog is up 40% so far this year.
The drivers of these results are those that we and others have been talking about — the secular demand drivers of digital transformation, cloud, and AI. Those forces have Digital’s data center development pipeline at $9.3 billion entering the current quarter.
In our view, Digital's comments support those from Eaton ETN several weeks back, United Rentals URI earlier this week, and from Amazon AMZN, Nvidia NVDA, and Alphabet GOOGL in the last 24 hours. From a portfolio perspective, this is supportive of our holdings in NVDA, ETN, URI, Marvell Technology MRVL, Vulcan Materials VMC, and Waste Management WM.
Intel
While Intel’s March quarter was in some respects better than expected, as we suspected, the new management laid an egg in terms of its outlook for the current quarter relative to market forecasts. Not surprising, and if the new team hadn’t delivered a kitchen sink outlook, we would have been more surprised.
What matters more in Intel’s results and comments was what it had to say about the AI PC market. Intel's comments were supportive of the continued adoption in the coming quarters as the end of service for Windows 10 takes hold and a post-Covid PC refresh unfolds. Intel said the demand it is seeing for AI PCs is “strong,” especially from commercial customers as they look to future-proof their products and have that AI capability.
We see that as very supportive of Qualcomm’s QCOM AI PC business, and when it reports next week, we’ll be looking for an update on its conversion from AI PC design wins to shipping product for the coming quarters. Progress on that front, as well as in automotive and IoT, are factors that will reduce Qualcomm’s exposure to the smartphone market, and, in our opinion, drive Wall Street to revisit how it views the shares.
Turning to Intel’s data center and AI revenue for the March quarter, it rose 8% year over year which, measured against capital spending levels and other data points, suggests Intel continues to lose share to Nvidia, Marvell, and others. In addition to efforts by Nvidia and Advanced Micro Devices AMD, the ramping of proprietary AI chip products from Microsoft MSFT, Amazon, Meta META, and Alphabet through Marvell suggests Intel is likely to have a tough time catching up. We’ll look for comments about those efforts from Amazon, Meta, and Microsoft when they report next week.
At the time of publication, TheStreet Pro Portfolio was long ETN, URI, AMZN, NVDA, MRVL, VMC, WM, QCOM, MSFT and META.
