Executive Summary / Key Takeaways

• AI-Driven Growth Engine: DigitalBridge Group, Inc. (DBRG) stands as a leading global alternative asset manager, uniquely positioned to capitalize on the accelerating AI revolution by investing across the entire digital infrastructure ecosystem, from hyperscale data centers to mobile edge.
• Robust Capital Formation & Expanding Margins: The company delivered strong financial performance in Q2 2025, with fee revenue up 8% year-over-year and Fee-Related Earnings (FRE) growing 23% year-over-year, driving LTM FRE margins to 36%. DBRG reaffirmed its 2025 guidance, targeting FEEUM over $40 billion and FRE growth of 10-20% with a 200 basis point margin improvement.
• Unrivaled Power & Platform Advantage: DBRG boasts an industry-leading secured power bank of nearly 21 gigawatts and operates eight global data center platforms, enabling it to meet unprecedented AI-driven demand without the power constraints facing many competitors. This multi-platform approach provides tailored solutions across the core, private cloud, and edge.
• Embedded Value & Diversified Strategies: Beyond recurring fees, DBRG is cultivating substantial embedded value through carried interest from its maturing fund vintages, with significant DPI expected from 2026-2030. New strategies in digital energy (Takanock), stabilized data centers, and private credit are expanding its addressable market and diversifying capital sources.
• Execution Focus Amidst Volatility: Despite market volatility and past timing impacts on FRE, DBRG's management is committed to consistent execution, transparent asset marking, and strategic capital deployment, aiming to close the perceived valuation discount relative to its peers.

The Digital Infrastructure Imperative: DBRG's Strategic Foundation

DigitalBridge Group, Inc. (DBRG) has evolved from its 2013 origins as a private equity firm into a preeminent global alternative asset manager, singularly focused on the digital infrastructure ecosystem. This transformation, marked by key acquisitions and strategic shifts, has positioned DBRG at the epicenter of the AI-driven economic revolution. The company's overarching strategy, encapsulated in its "Fundraise, Invest, and Scale" pillars, is designed to generate scalable growth with expanding margins, delivering predictable, reoccurring revenue for its shareholders.

The current market landscape is defined by an unprecedented surge in AI workloads. Google (GOOGL)'s token processing, a proxy for AI compute demand, exploded 50-fold year-over-year to 480 trillion tokens per month by May 2025, then doubled again to over 980 trillion by July 2025. This "token explosion" is directly fueling record hyperscale leasing demand, with the U.S. pipeline alone reaching 5 gigawatts. Consequently, hyperscaler capital expenditure (CapEx) forecasts for the "Big 5" are reforecasting to over $380 billion for 2025, a 20% increase from just six months prior. DBRG is not merely participating in this build-out; it is leading it, deploying over $43 billion of CapEx across its portfolio by the end of 2026, with its share approaching $30 billion.

DBRG's historical journey underpins its current strategic responses. The 2019 merger of Digital Bridge Holdings, LLC (DBH) brought in key leadership and established the operating company, DigitalBridge Operating Company, LLC (OP), as the primary vehicle for its activities. Subsequent launches of flagship funds (DBP I in 2018, DBP II in 2020), strategic acquisitions like Switch (2022), and the diversification into core equity, credit, and private wealth strategies have built a robust, multi-faceted platform. This evolution has enabled DBRG to address the secular, rather than cyclical, demand for digital infrastructure, making its business model resilient even amidst broader market uncertainties.

Technological Edge and Operational Moats

DBRG's competitive advantage in the digital infrastructure space is less about proprietary hardware and more about its unparalleled operational expertise, strategic foresight, and the unique assets it has cultivated. The company's "technology" manifests in its ability to identify, develop, and manage mission-critical infrastructure at scale, particularly in power-constrained environments.

A cornerstone of DBRG's differentiation is its secured power bank, which stands at nearly 21 gigawatts across its portfolio. This is an industry-leading strategic land bank for the AI revolution, significantly larger than those of many publicly traded data center REITs. This massive power capacity allows DBRG to meet customer demand without the critical "time to power" bottleneck that plagues competitors. For instance, the newly launched Takanock strategy, backed by a $500 million commitment from ArcLight and DigitalBridge, specifically addresses this by developing "powered land" and on-site dispatchable power solutions. Takanock already controls over 1,600 acres, with potential for nearly 3 gigawatts of IT capacity and over 5 gigawatts of generation capacity, offering shovel-ready sites that dramatically accelerate AI deployments. This capability provides prime power now and can transition to grid support later, offering flexibility and ESG-aligned design.

Furthermore, DBRG's multi-platform approach across eight global data center platforms (including Vantage, Switch, DataBank, and Yondr) allows it to offer tailored solutions for diverse AI workloads. From giga-scale campuses for massive model training (Vantage, Scala, Yondr) to private cloud and enterprise solutions (Switch) and low-latency edge compute for inference (DataBank), DBRG can meet customers "wherever they are in their AI journey with the right solution for most importantly, the right workload." This differentiated strategy contrasts with competitors who may specialize in only one segment, providing DBRG with a broader customer base and diversified revenue streams. The recent acquisition of Yondr Group for $5.8 billion, with its 400 MW of leased capacity and path to over 1 GW, further solidifies DBRG's leadership in hyperscale powered shell development.

Competitive Arena: DBRG's Strategic Positioning

DigitalBridge operates in a highly competitive landscape, facing both direct rivals in digital infrastructure investment and indirect threats from hyperscale cloud providers. DBRG's strategic positioning leverages its diversified portfolio and operational expertise to carve out a unique niche.

Compared to traditional wireless infrastructure players like American Tower Corporation (AMT) and SBA Communications Corporation (SBAC), DBRG offers a broader digital ecosystem approach. While AMT and SBAC excel in the scale and operational efficiency of cell towers, DBRG's investments span data centers, fiber, and edge infrastructure, providing more comprehensive solutions for digital transformation. DBRG's ability to integrate real estate with infrastructure, as seen in its Landmark platform, offers a unique value proposition that can adapt faster to market shifts than the more tower-centric models of AMT and SBAC. For instance, while SBAC might lead in execution speed for tower projects, DBRG's diversification across the ecosystem allows it to capture growth from multiple vectors, such as the recent surge in fiber demand for AI workloads.

Against data center pure-plays like Equinix, Inc. (EQIX), DBRG's investment firm model provides diversified exposure and potentially greater efficiency in capital allocation. EQIX leads in product performance with its established interconnection capabilities and extensive global data center network. However, DBRG's strategic focus on identifying and backing platforms with significant power capacity and development pipelines, such as the 21 GW power bank, directly addresses the primary constraint for AI growth. This allows DBRG to offer "shovel-ready sites with power" that competitors may struggle to match. DBRG's acquisition of Yondr, a hyperscale powered shell developer, further strengthens its ability to serve the largest cloud and AI players, complementing its existing data center portfolio.

DBRG also faces indirect competition from hyperscale cloud providers (e.g., Amazon Web Services (AMZN), Google Cloud) that offer integrated digital solutions. However, DBRG's role as an infrastructure partner to these giants, building the underlying "AI factories," positions it as a critical enabler rather than a direct competitor. The company's emphasis on "backing great teams" and its 30 years of operational experience allow it to build trust and deliver complex, mission-critical infrastructure that differentiates it from "tourists playing in data center land."

Financial Performance: A Story of Growth and Strategic Shifts

DigitalBridge's financial performance in recent periods reflects its strategic focus on growth and margin expansion, albeit with some inherent volatility tied to the nature of alternative asset management.

In Q2 2025, DBRG reported fee revenue of $85.3 million, an 8% increase year-over-year. For the six months ended June 30, 2025, fee revenue reached $175.4 million, up 16% from the prior year. This growth was primarily driven by additional capital raised for the third flagship fund, contributing an incremental $8.5 million in Q2 2025 and $29.1 million year-to-date, including $10.6 million in catch-up fees. The deployment of capital by various funds and co-investment vehicles also fueled this expansion. Full-year 2024 fee revenue reached $330 million, a 23% increase over 2023, demonstrating consistent top-line growth.

Fee-Related Earnings (FRE), a key profitability metric, saw robust growth. FRE increased 23% year-over-year to $32.0 million in Q2 2025, and 42% year-over-year in Q3 2024. For the full year 2024, FRE grew 31% to $107 million. This strong FRE performance has led to expanding margins, with the LTM FRE margin reaching 36% in Q2 2025, up from 32% in Q4 2024. This trend underscores DBRG's ability to grow revenues faster than expenses, a central tenet of its investment thesis.

However, Distributable Earnings (DE) exhibited volatility. Q2 2025 DE was negative $18.6 million, primarily due to a $40 million realized loss from an InfraBridge fund investment. This loss, previously reported as an unrealized loss, had no impact on FRE or cash flow in the quarter. In contrast, Q1 2025 DE was a positive $55 million, bolstered by a $34 million gain from the partial realization of the DataBank investment. This highlights the episodic nature of realized gains and losses, which management aims to make more consistent over time.

Carried interest also showed variability, with a net reversal of $12 million in Q2 2025 and $5 million in Q1 2025. This is attributed to portfolio appreciation in early-to-middle lifecycle funds not consistently exceeding preferred return hurdles. Despite these quarterly fluctuations, full-year 2024 net carried interest revenue was $46.6 million, and the company's net accrued carried interest asset stood at $181 million to DBRG shareholders. Management emphasizes that they are not paid on "paper marks" and maintain a conservative valuation framework, historically selling assets at a 20-40% premium to NAV.

From a liquidity perspective, DBRG maintains a strong position. Available corporate cash was $158 million at June 30, 2025. The company strategically reduced its Variable Funding Notes (VFN) facility capacity from $300 million to $100 million in June 2025 to optimize costs, with the facility remaining fully undrawn. Unfunded equity commitments to unconsolidated funds totaled $187 million, indicating future capital deployment opportunities.

Strategic Initiatives: Building for the Future

DBRG's strategic roadmap for 2025 and beyond is centered on expanding its multi-strategy platform and capitalizing on emerging opportunities within the digital economy.

A key focus is the DigitalBridge Partners (DBP) flagship strategy, which continues to attract significant capital. The DBP III strategy raised $6.9 billion year-to-date in Q2 2025, targeting over $7 billion by its Q3 2025 final close. This fund provides diversified global exposure to the digital infrastructure ecosystem and remains the bedrock of the platform. The co-investment program is also maturing, with fee rates averaging 60 basis points year-to-date in Q2 2025, a 30% increase from its historical average. These co-investments are crucial for funding massive expansions at portfolio companies like Vantage and Switch, acting as a "force multiplier" for growth and expanding carry-eligible capital.

New strategic initiatives are also taking shape. The official launch of Takanock in June 2025, with a $500 million commitment alongside ArcLight, marks a significant step into the digital energy strategy. Takanock's focus on developing "powered land" directly addresses the critical power bottlenecks for hyperscalers, accelerating AI deployments. The successful completion of the Yondr Group acquisition in July 2025, a global hyperscale data center platform, further expands DBRG's capacity to serve cloud and AI players. Yondr, with its 400 MW of leased capacity and path to over 1 GW, becomes DBRG's eighth global data center platform.

The private credit platform is emerging as a key growth engine. With a pipeline of over 90 discrete opportunities representing $13 billion in new loan origination, DBRG targets deploying up to $2 billion in 2025. This strategy leverages DBRG's deep operational expertise to provide credit solutions to digital infrastructure borrowers, offering attractive returns in a market where private credit's appeal is elevating due to market volatility. The private wealth channel is another area of significant expansion, with a second AI-centric product launched. DBRG expects to exceed $1 billion raised from this channel in 2024, demonstrating its ability to tap into new pools of capital with differentiated offerings. Furthermore, a stabilized data center strategy is being developed to acquire investment-grade data centers, targeting real estate investors and addressing the "congestion of stranded capital" in the market.

Outlook and Risks: Charting the Course Ahead

DigitalBridge's outlook for 2025 is characterized by strong conviction in its ability to execute against ambitious targets, driven by the accelerating demand for digital infrastructure. The company has reaffirmed its 2025 financial guidance, targeting Fee Earning Equity Under Management (FEEUM) to grow to over $40 billion. This growth is expected to be fueled by the final close of its third flagship fund, continued scaling of its private credit and private wealth channels, and the successful launch of new strategies in digital energy and stabilized data centers.

Management anticipates FRE growth of 10% to 20% over 2024, coupled with an improvement in FRE margins by approximately 200 basis points. This margin expansion is a core focus, driven by operational efficiencies and a disciplined approach to cost management. Unlike 2024, where FRE performance was back-ended due to fundraising timing, 2025's performance is expected to be "somewhat front-loaded" due to anticipated catch-up fees and the activation of fees on previously committed capital.

A significant component of DBRG's long-term value proposition lies in carried interest. While currently episodic, management aims to make its realization more consistent as funds mature. Marc Ganzi indicated that "it wouldn't surprise me... over the next 18 months if we end up divesting of 2, 3 or 4 different companies," which would generate Distributable Principal Investment (DPI) and carried interest for shareholders. He further noted that for 2019 vintage funds, 2026-2027 are expected to be "magical years" for meaningful carried interest, with 2029-2030 for 2022 vintage funds.

Despite this optimistic outlook, DBRG faces pertinent risks. Carried interest volatility remains a factor, as its accrual is based on quarterly fair value changes relative to preferred return hurdles, which can lead to reversals in early-to-middle lifecycle funds. Market volatility and fundraising delays can impact the timing of capital commitments, as observed in early 2025, although management has built this into its current model. The interest rate environment also poses a challenge, as higher rates can dampen M&A activity and increase financing costs for new investments. However, management anticipates rate cuts over the next six quarters, which could create M&A momentum. Potential tariff impacts on data center construction costs (estimated at 3-7% of total build cost) are deemed manageable, with DBRG expecting to recover most in new contracts due to tight markets and power challenges.

Conclusion

DigitalBridge Group, Inc. is strategically positioned as a leading alternative asset manager, uniquely equipped to capitalize on the profound and accelerating shifts driven by artificial intelligence. Its comprehensive "Fundraise, Invest, Scale" blueprint, refined over decades, is actively building the critical infrastructure that underpins the digital economy. The company's recent financial performance, marked by robust fee revenue and FRE growth, coupled with expanding margins, demonstrates the efficacy of its multi-strategy approach.

DBRG's distinct competitive advantages, particularly its industry-leading 21-gigawatt secured power bank and diversified portfolio spanning hyperscale, private cloud, and edge data centers, provide a formidable moat against competitors. New initiatives in digital energy, stabilized data centers, and private credit are not merely incremental; they are strategic expansions into high-growth, high-demand verticals, designed to tap new capital pools and address critical industry bottlenecks. While the realization of carried interest remains episodic, the immense embedded value within its maturing funds promises significant future distributions. With reaffirmed 2025 guidance and a clear roadmap for sustained growth and profitability, DigitalBridge presents a compelling investment thesis for those seeking exposure to the foundational infrastructure powering the AI revolution.