Iron Mountain, the company best known for storing boxes of paper records, is increasingly making its money from a very different kind of storage: data centers. On the back of surging demand from artificial intelligence companies, the firm raised its full-year forecast after leasing 110 megawatts of data center capacity through July.
The update came as Iron Mountain reported quarterly results that topped Wall Street expectations on both revenue and adjusted funds from operations (AFFO), a cash-based profit measure commonly used to evaluate real estate investment trusts (REITs). The stronger-than-expected numbers underscore how the company's pivot toward digital infrastructure is starting to pay off.
From paper boxes to power-hungry servers
Iron Mountain built its reputation—and its business—on storing physical documents for corporations, law firms, and government agencies. That remains a steady, if slow-growing, source of revenue. But the company has been deliberately shifting its focus toward faster-growing areas, particularly data centers and IT asset disposition (the recycling and resale of used computer equipment).
Data centers are essentially large warehouses filled with servers that power cloud computing, streaming, and increasingly, artificial intelligence workloads. AI models require enormous amounts of computing power, which in turn requires vast amounts of electricity and cooling. That has made data center space one of the most sought-after commercial real estate assets in the market.
The 110 megawatts leased through July is a clear sign of that demand. A megawatt is a unit of power; for context, a typical data center campus might use tens of megawatts to run thousands of servers. Leasing 110 megawatts means Iron Mountain has signed contracts to provide space and power for a significant amount of computing capacity.
What the numbers tell us
Iron Mountain's decision to raise its full-year guidance suggests management is confident the momentum will continue. The company now expects to generate more revenue and cash flow than it previously projected, thanks largely to the data center leasing activity.
The beat on AFFO is particularly important for REIT investors. AFFO is a measure of the cash a REIT generates from its operations, and it's often used to assess whether a company can sustain its dividend. Iron Mountain has a long history of paying and increasing its dividend, and a higher AFFO outlook is generally a positive signal for income-focused shareholders.
That said, the company's transformation is not without challenges. Building and operating data centers requires heavy capital investment, and competition from tech giants and specialized data center REITs is intense. Iron Mountain's legacy paper storage business, while stable, is not growing quickly, so the company is relying on its newer segments to drive future growth.
What it means for investors
For everyday investors, Iron Mountain's update is a reminder that even traditional businesses can reinvent themselves. The company's stock is often viewed as a defensive holding—people always need to store records—but the data center push gives it a growth angle tied to one of the market's hottest themes: artificial intelligence.
Investors should note that the AI boom has lifted many companies that provide the infrastructure behind it, from chipmakers to cloud providers. Data center operators like Iron Mountain are part of that ecosystem, and their fortunes are increasingly linked to how quickly AI companies can deploy new computing capacity.
However, it's worth remembering that leasing 110 megawatts is a snapshot, not a guarantee. The pace of leasing can slow if AI spending cools or if new supply floods the market. Iron Mountain's raised guidance is a positive sign, but it doesn't eliminate the risks that come with any growth-oriented business.
For those who own Iron Mountain shares, the key thing to watch is whether the company can continue to convert its data center pipeline into signed leases and, ultimately, into cash flow. For those considering an investment, the company's dual identity—part stable REIT, part AI infrastructure play—means it offers a mix of income and growth potential, but also a mix of risks.
As always, it's wise to look at the broader picture. Other companies have recently raised forecasts on strong demand, such as Next lifting its profit outlook and IDEXX raising its full-year forecast. Each story is different, but they all point to the importance of company-specific drivers in a market that can be volatile.
Iron Mountain's next earnings report will be closely watched to see if the AI-driven leasing momentum continues. For now, the company's raised guidance is a clear signal that its data center bet is paying off—and that the boxes of paper that built the company are no longer the whole story.
