American Tower Lifts Outlook on Data Center Surge
The telecom REIT beat third-quarter estimates for revenue and funds from operations, signaling strong demand driven by AI and cloud computing workloads.
American Tower Corp. (NYSE: AMT) raised its full-year financial forecast on Tuesday after delivering third-quarter results that surpassed analyst expectations, propelled by accelerating growth in its data center division.
The Boston-based real estate investment trust (REIT) reported a robust 7.7% year-over-year increase in total revenue to $2.72 billion for the quarter, beating the consensus estimate. The company’s performance was further highlighted by its Adjusted Funds From Operations (AFFO), a key REIT metric of profitability, which came in at $2.78 per share, comfortably ahead of Wall Street’s expectation of $2.62.
Shares of American Tower saw volatile trading following the announcement, reflecting a complex market environment. Despite the strong report, the stock was down approximately 0.9% to $189.73 in morning trading. The company, a giant in wireless infrastructure with a market capitalization of nearly $90 billion, is navigating a landscape of high interest rates while capitalizing on secular growth trends in digital data consumption.
The standout performer in the quarterly report was the company's data center business, operated under its subsidiary CoreSite. This segment, which American Tower has been strategically expanding, posted a significant 14.1% year-over-year revenue increase. According to the company, the surge was driven by record new leasing activity for retail data center space, fueled by strong demand for hybrid-cloud solutions and artificial intelligence-related workloads.
This performance underscores a successful strategic pivot for American Tower, which has traditionally been known for its vast portfolio of over 220,000 communications sites globally. The company's investment in data centers is positioning it to capture a larger share of the digital infrastructure ecosystem, moving beyond traditional cell towers to serve the voracious data processing and storage needs of the modern economy.
Reflecting confidence in its operational momentum, American Tower raised its full-year 2025 outlook for key metrics including property revenue, Adjusted EBITDA, and AFFO per share. While specific figures for the new guidance were not immediately detailed, the upward revision signals management’s positive view on sustained demand through the end of the year.
The company’s strategy involves significant capital deployment to enhance this growth. Earlier this year, American Tower outlined plans to invest approximately $600 million into data center development in 2025, a move aimed at directly supporting AI and hybrid-cloud expansion.
Wall Street remains broadly positive on American Tower's prospects. The stock currently holds a consensus "Moderate Buy" rating from analysts. Ahead of the earnings release, the average 12-month price target stood at approximately $237.95, suggesting significant upside from its current trading level. Recent analyst actions include a price target increase to $251 by Barclays earlier in October, while BMO Capital Markets adjusted its target to $220, as noted by MarketBeat.
As 5G network buildouts continue and the proliferation of AI applications demands ever more data capacity, American Tower's integrated portfolio of cell towers and data centers presents a unique value proposition. Investors will be closely watching whether the robust growth in its data center segment can continue to offset potential headwinds in the broader macroeconomic environment and drive shareholder value.