Digital Bridge believes Gen AI to be the next growth driver of demand for digital infrastructure just like digital PCS was 20 years ago and just like public cloud was 10 years ago. The company said it is well-positioned to take advantage of client needs. – DigitalBridge graphic.
DigitalBridge stock gained 1.2% in Friday trading after the company turned in much stronger than expected Q2 revenue and said it remains on track for its $8.0B fundraising target. During the Q2 analysts call, CEO Marc Ganzi’s message of “promises made, promises kept” appeared to resonate with shareholders as DBRG in pre-market this morning was up 4.23% at $16.73.
Ganzi said the company is continuing to deliver on its fundraising goals, deliver on deconsolidation, and its portfolio companies continue to perform well.
The Q2 total revenue of $424.9M, vs. $298.9M consensus, rose from $297.4M in the prior quarter to $416.6M a year ago. Fee income rose to $65.7M from $59.1M in the previous quarter and $44.3M in the year-ago period.
DigitalBridge, however, had a net loss of $(0.14) per share, which exceeded the analyst consensus estimates.
Ganzi said that generative AI opportunity “is going to be at least as big as the public cloud market was over a decade ago.” Data center power consumption will continue to be a critical issue with Ganzi stating that it is “set to to rise dramatically and increasingly be dominated by these AI workloads.” Ganzie cited estimates that AI will consume 80 percent of data center power over the next 15 years.
“As AI models are deployed, and AI-powered applications proliferate over the next few years, inference and the growing relevance of the entire network will become clear. Gen AI is edge-delivered. This is an important concept for all investors to get their minds wrapped around.”
“For the actual applications, we use our phones; we use our laptops, and speed and latency matter. It’s not efficient to send data back and forth to Ashburn, Virginia, from Boston or Miami. The trained AI models need to live close to the consumer or the device or the enterprise. By the way, they can’t live on your phone either if you want battery life longer than 5 minutes,” Ganzi informed analysts.
Data centers were up 22% year-over-year for DigitalBridge. Towers also drove substantial growth, up 21% year-over-year, as carriers build their 5G networks around the world.
Fiber saw a healthy increase, up 15%, plus there was sustained growth in small cells.
Ganzi said, “We believe densification in 5G networks will drive those numbers higher in the back half of this year and certainly into ‘24 and ‘25.”
He touched upon the challenges other data center REITs have gone through in terms of funding future CapEx, emphasizing, “The fact that we’ve deployed $4 billion of CapEx already this year, which was 75% data center-driven and most of that being public cloud and private cloud-driven shows that we can still form capital and we can deploy capital and we can show up for customers.”
