Prologis, Inc. (PLD) | The Buildout — AI Infrastructure
The Verdict
Prologis owns, manages and develops logistics facilities and, increasingly, data centers. In the AI buildout, it provides the real estate, land, power access, entitlements, and pre-leased shells that compute infrastructure physically needs. Its services also span solar and storage capacity and warehouse space for the data-center supply chain. The business sells physical and energy infrastructure rather than chips, compute, or cloud services.
| Market Cap | — |
| Revenue (TTM) | $9.2B |
| Revenue Growth | +7.3% |
| EBITDA Margin (TTM) | 68.2% |
| Net Debt | $34.7B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Real Estate segment generally contributes 90–95% of consolidated revenues, earnings, and FFO, per the 10-K.
- Record 64 million square feet of Q1 2026 leasing, with the pipeline reaching new highs.
- Data-center starts of $1.3 billion / 350 MW in Q1 2026, both pre-leased long-term to investment-grade technology tenants.
- 5.6 GW of power secured or in advanced stages, plus 1.3 GW under LOI.
- Balance-sheet advantage: $5.5 billion raised in Q1 at roughly 3.75%, including a $3 billion facility recast at 63 basis points.
What We’re Watching
- Data-center revenue and NOI are not separately disclosed, so the current recurring earnings contribution is unclear.
- Free rent is elevated at about 7.3% of lease value versus an expected norm around 3%.
- Q1 same-store NOI benefited from unusually low bad debt, which may not repeat.
- SEGRO integration, closing, and financing details are incomplete; the recommended deal was announced August 4, 2026.
The operating thesis is strengthening: logistics rents inflected, data-center starts began, and strategic capital formation accelerated. The biggest offset is that the corporate story now includes a large, still-unresolved SEGRO acquisition and a data-center capital structure decision. The open question is whether execution on LOI conversion, SEGRO integration, and the enlarged balance sheet can keep pace with the expanded deployment ambitions.
Earnings Beat
In the most recent tracked quarter, revenue was $2,425.5 million and gross margin was 17.3%; EBITDA was $1,649.2 million. The Q2 2026 release said leasing hit a record and 2026 guidance was raised for the second time, though detailed Q2 figures were not included.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $2.4B | $2.3B | $2.2B | +11.1% |
| Gross margin | 17.3% | 10.1% | 74.7% | -5740bps |
| EBITDA | $1.6B | $1.6B | $1.6B | +5.1% |
| EPS | $1.11 | $1.03 | $0.60 | +85.6% |
It has gone from, say, less than 5% of new leasing a year ago to now 10% of new leasing, and it’s an even greater share of the forward-looking pipeline.— Chris Caton, Managing Director, 2026-04-16
Management tone: Management shifted from prior-quarter tariff uncertainty to a new Middle East uncertainty, while operational language strengthened on data centers and logistics. They corrected a data-center margin statement mid-call and deferred on data-center fund timing.
Management Guidance
On the Q1 2026 call, management raised FY2026 Core FFO excluding net promote expense to $6.12–$6.28, net effective same-store NOI growth to 4.75%–5.5%, cash same-store growth to 6.25%–7.0%, and development starts to $4.5B–$5.5B owned-and-managed. Data-center share of starts remained approximately 40%, and contributions and dispositions guidance was raised to $3.5B–$4.5B. The full-year net effective rent-change expectation of approaching 40% was maintained. The Q2 2026 release said guidance was raised a second time, but detailed updated figures were not included.
Trajectory
Revenue has accelerated sequentially across the four most recent quarters: $2,214M, $2,253M, $2,298M, $2,426M. Trailing revenue growth is 7.3% year over year. The computed signals show gross margin compressing, operating margin stable, and EBITDA margin slightly compressing, while FCF conversion is 124% of net income. Core logistics shows the first market-rent increase in 2.5 years, but large, lumpy development gains continue to influence reported net income.
The Model
The model projects FY+1 revenue of $9,518M and EBITDA of $6,463M, a 67.9% margin. For FY+2, the model projects revenue of $10,257M and EBITDA of $7,088M, a 69.1% margin. The near term is anchored by the logistics rent roll and data-center starts; FY+2 depends on converting the 1.3 GW LOI book into executed leases and on outcomes from the SEGRO integration, neither of which has separate disclosure in the provided material.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $8.8B | $9.5B | $10.3B |
| YoY Growth | — | +8.3% | +7.8% |
| EBITDA | $6.2B | $6.5B | $7.1B |
| EBITDA Margin | 70.1% | 67.9% | 69.1% |
Projections are the median of 5 independent model runs.
On the Q1 2026 call, management raised FY2026 Core FFO excluding net promote expense to $6.12–$6.28, net effective same-store NOI growth to 4.75%–5.5%, cash same-store growth to 6.25%–7.0%, and development starts to $4.5B–$5.5B owned-and-managed. Data-center share of starts remained approximately 40%, and contributions and dispositions guidance was raised to $3.5B–$4.5B. The full-year net effective rent-change expectation of approaching 40% was maintained. The Q2 2026 release said guidance was raised a second time, but detailed updated figures were not included.
What Could Go Right — and Wrong
- Convert the 1.3 GW data-center LOI book into executed leases and starts.
- Sustain broad-based logistics rent growth beyond current pockets of strength, including Southern California and Seattle.
- Commercialize the 5.6 GW power pipeline as more secured utility agreements are signed.
- Complete and integrate SEGRO, building a materially expanded European platform.
- Scale strategic capital revenue toward the guided $660–$680M and grow fee/promote income from five new vehicles.
- Customer decision-making slows from Middle East conflict or macro uncertainty.
- An economic slowdown stalls logistics rent recovery; management conditions continued growth on no slowdown.
- Power, equipment, or municipal constraints delay data-center starts and development gains.
- SEGRO integration strains the balance sheet while the company absorbs the expected $2.1B equity offering.
- Development gains remain lumpy; Q1 delivered $293M of the $500–$700M full-year guide in one quarter.
Looking Ahead
The next 12 months center on whether the data-center pipeline converts, SEGRO reaches completion, and logistics rent growth broadens. Management has given no closing date for SEGRO and no timing for the data-center capital structure decision. Power progression has long lead times: 12–24 months to advanced stage and another 1–2 years to secured.
- No timingSouthern California recovery — Expected to lag the overall market, then improve; no specific timeframe provided.
- 12–24 monthsPower moves to advanced stage — Utility negotiations progress from preliminary agreement toward firm power.
- 1–2 yearsSecured power agreements — Binding energy service agreements guarantee delivery and commit utility buildout.
- No timingSEGRO completion — No closing date or full condition list provided in source.
- No timingData-center fund decision — Management still evaluating multiple capital structure options.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $8.2B | $8.8B | $9.2B | +7.2% |
| Gross Margin | 74.9% | 59.8% | 29.0% | 1,505bps |
| EBITDA | $7.0B | $6.2B | $44.1B | -11.9% |
| EBITDA Margin | 85.3% | 70.1% | 68.2% | 1,520bps |
| Net Income | $3.7B | $3.3B | $4.2B | -10.8% |
| Free Cash Flow | $4.6B | $5.0B | $32.5B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)29.0%
- EBITDA Margin (TTM)68.2%
- Net Margin (TTM)45.8%
- ROIC3.2%
- FCF Conversion83.6%
- SBC / Revenue2.2%
The Company
Prologis owns, manages and develops high-quality logistics facilities and increasingly develops data centers through its land, power and development capabilities. The 10-K says its services address modern supply chains, including the growing convergence of physical, digital and energy infrastructure. The company describes itself as the global leader in logistics real estate across 20 countries on four continents.
The Real Estate segment—rental operations and development—generally contributes 90–95% of consolidated revenues, earnings, and FFO; Strategic Capital contributes 5–10% excluding promotes. PLD controls approximately 14,000 acres of land and 6,000 buildings across more than 70 markets. California represents 30.6% of consolidated operating properties, or $24.7 billion based on consolidated gross book value.
Business Segments
Competitive Landscape
Prologis describes itself as the global leader in logistics real estate in high-barrier, high-growth markets. The supply-chain output names Digital Realty, Equinix, Iron Mountain, Rexford, STAG, and Terreno as peers; those names are inferred from ecosystem data, not confirmed by PLD quotes in the provided material.
- Digital RealtyInferred data-center/industrial peer in the supply-chain output; not confirmed by direct PLD quotes.
- EquinixInferred data-center/industrial peer in the supply-chain output; not confirmed by direct PLD quotes.
- Iron MountainInferred data-center/industrial peer in the supply-chain output; not confirmed by direct PLD quotes.
- RexfordInferred industrial peer in the supply-chain output; not confirmed by direct PLD quotes.
- STAGInferred industrial peer in the supply-chain output; not confirmed by direct PLD quotes.
Supply Chain
Prologis sells land, power access, development capability, and pre-leased data-center shells into the AI buildout; its logistics warehouses also serve data-center suppliers. No neighbor transcript in the package mentions PLD by name.