GDS Q2 Earnings Call Focuses on AI Demand, 1-GW Sales Target

GDS Raises 2026 Sales Target to 1 GW

CEO Huang said that GDS booked 260 megawatts in the second quarter, lifting first-half bookings to a record 470 MW. The company raised its 2026 sales target to 1 GW.

Huang said that customers also reserved another 600 MW this year and GDS expects reservations to exceed 1 GW by year-end. He described reservations as a source of visibility for future binding orders.

For quarterly context, revenues of $455.1 million missed the Zacks Consensus Estimate of $463.2 million. Reported EPS of $0.56 also fell short of the $1.35 estimate.

GDS Holdings Sees AI Demand Broadening

Huang said that China’s tech giants and emerging AI companies are driving higher demand for computing capacity. First-half bookings were split roughly evenly between established markets and newer locations.

Huang also mentioned that GDS won meaningful business from each of its three largest hyperscale customers while beginning relationships with emerging AI leaders. He stressed that the company remains selective with newer customers.

Huang added that GDS had more than 2 GW of binding commitments at midyear, plus 600 MW of reservations. Around 3 GW of developable capacity remained uncommitted or unreserved, mostly in new markets.

GDS Backlog Supports a 2027 Move-In Step-Up

Newman said that backlog expanded from 450 MW at the start of 2026 to 757 MW by midyear. He estimated average adjusted EBITDA of RMB2.2 million per megawatt from that backlog.

Newman expects 235 MW of move-ins for GDS for 2026, including 145 MW in the first half and another 90 MW in the second half. For 2027, move-ins are forecast to more than double.

Newman said that the 2027 move-in profile will be heavily weighted to the second half, creating a pronounced acceleration through the year. He also said 2028 should bring another step-up if sales momentum is sustained.

GDS Holdings Lifts Guidance and Capex

Newman increased full-year revenue guidance to RMB12.7 billion to RMB13 billion from RMB12.4 billion to RMB12.9 billion. Adjusted EBITDA guidance rose to RMB5.9 billion to RMB6.1 billion from RMB5.75 billion to RMB6 billion.

CFO Newman said the revised outlook includes first-quarter one-time items but excludes further asset monetization. A C-REIT asset injection remained under regulatory review and was not included in guidance.

CFO Newman also raised 2026 capex guidance to around RMB10 billion from RMB9 billion, reflecting stronger sales and development activity. GDS plans to finance new projects with roughly 60% debt and 40% equity.

GDS Clarifies Contracts, Reservations and Pricing

A Morgan Stanley analyst asked whether GPU delays could disrupt move-ins. Huang said that domestic GPU supply was catching up and CPU demand was supporting orders. Newman emphasized fixed delivery dates and take-or-pay commitments.

A Jefferies analyst asked whether reservations were nonbinding indications. Newman clarified that bookings and reservations sit in the same sales agreement, while Huang said that customers had exercised reservations at a 100% rate over the prior 12 to 18 months.

A Raymond James analyst pressed management on recurring revenue pricing. Newman said that fourth-quarter 2026 MRR is forecast to decline 3% year over year, reflecting market mix and legacy contract repricing, while Huang said that current pricing levels are stable.

GDS Holdings Keeps Financial Discipline Central

Huang said that stronger demand is prompting GDS to expand its deployment pipeline, but he emphasized selectivity on customers and contract terms. New investment remains tied to binding, long-term customer commitments.

Newman’s financing comments reinforced that posture, with project funding structured around debt and equity as management seeks to preserve financial discipline while capex rises.

Zacks Signals for GDS

GDS carries a Zacks Rank #3 (Hold) at present, with a Value Score of B, a Growth Score of C, a Momentum Score of A and a VGM Score of B. Under the Zacks methodology, A and B Style Scores are more favorable than lower grades.

The Rank #3 places GDS outside the Zacks Rank #1 (Strong Buy) and 2 (Buy) group that Zacks pairs most strongly with favorable Style Scores. The Zacks Rank can change as earnings estimates are revised following the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.

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