GDS lifts EBITDA outlook as AI-driven bookings hit record

China’s largest third-party data center operator reported a 838 million yuan second-quarter profit, as it doubled its 2026 sales target and raised its full-year guidance

Key Takeaways:

• GDS Holdings posted net income of 837.6 million yuan in the second quarter, with its net margin rising to 27.1%
• The data center operator’s new bookings hit 470 MW in the first half of 2026, exceeding all of 2025, prompting management to double its full-year sales target to 1 GW

By Teri Yu

GDS Holdings Ltd. (GDS.US; 9698.HK), the Shanghai-based operator of high-performance data centers, sustained its growth momentum in the second quarter and raised its full-year sales target, buoyed by robust AI-related demand and contract-signing activities. The company last Thursday reported a net profit of 837.6 million yuan ($123.5 million) for the quarter, reversing a net loss of 70.6 million yuan a year earlier, as demand for AI computing capacity continued to reshape its business.

As China’s leading independent data center operator, GDS and its peers are at the leading edge of the AI revolution as key infrastructure providers, supporting the huge volumes of computing demand required by AI.

The company’s revenue for the three months through June rose 6.5% year-on-year to 3.09 billion yuan, while its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.5% to 1.41 billion yuan, translating to a healthy adjusted EBITDA margin of 45.5%. The company also recorded a 959.9 million yuan dilution gain from an external investment during the quarter.

Riding the AI wave

“We delivered solid financial and operational results in the second quarter of 2026, reflecting our continued commitment to disciplined execution,” said William Huang, GDS’ founder, chairman and CEO. “We are very excited about the opportunities in China ahead of us, driven mainly by AI demand. We are confident in our ability to capture these massive opportunities and expand our business at scale.”

The company’s core metrics all posted strong gains. Its total committed and pre-committed area rose 18.2% year-on-year to 784,802 square meters, while the utilization rate for area in service climbed to 79.2% from 77.5% a year earlier, reflecting strong sales momentum and accelerating commitment conversion. Its area under construction jumped 28.8% to 170,355 square meters, with a pre-commitment rate of 89.2%, meaning new capacity is being taken well before it comes online.

GDS’ Nasdaq-listed shares rose 6.2% to close at $34.77 on Thursday after the results came out. The stock currently trades at a price-to-earnings (P/E) ratio of 19. Analysts expect the company’s revenue growth to accelerate to 16.4% for the year, according to the average of 24 polled by Yahoo Finance.

Strong AI demand also supercharged the company’s order book. GDS signed 260 MW of new capacity commitments in the second quarter alone, bringing first-half bookings to a record 470 MW — already surpassing the total for all last year. That momentum led management to nearly double its full-year sales target to 1 GW, up from an original goal of 500 MW.

“Our sales momentum is the strongest we have ever seen,” Huang told analysts on the company’s earnings call. He noted that GDS won significant new business from each of its three largest hyperscale customers in the first half of the year, while also beginning to build relationships with a new cohort of “emerging AI leaders.” Roughly half of its first-half bookings came from newer markets such as Ulanqab and Horinger in the Inner Mongolia region, and Shaoguan in Guangdong province, illustrating how GDS is diversifying its geographic footprint to chase demand where power and land are available.

Beyond signed contracts, customers have also locked in an additional 600 MW of reserved future capacity this year, with management expecting total 2026 reservations to exceed 1 GW — a leading indicator the company says has historically converted into bookings at a 100% rate.

CFO Dan Newman told investors that the company’s backlog swelled to 757 MW by mid-year from 450 MW at the start of 2026, representing roughly 1.6 billion yuan of “booked but not billed” adjusted EBITDA set to flow through as new data centers are delivered and ramp up.

Building for tomorrow

To keep pace with demand, GDS raised its 2026 capital expenditure guidance to around 10 billion yuan from 9 billion yuan, saying it would fund the outlay through a disciplined mix of roughly 60% project-level debt and 40% equity. The company secured 4.9 billion yuan of new debt financing and refinancing during the quarter alone, which management said reflects a highly supportive onshore lending market.

Newman noted the company has deleveraged to 4.7 times net debt to annualized adjusted EBITDA, leaving room to fund expansion while building out its onshore asset-monetization program, including a second potential asset injection into its C-REIT vehicle currently under regulatory review.

Together with its improved financial position and access to multiple funding channels, the new financing gives GDS greater flexibility to accelerate investment in China and convert its record order backlog into operating capacity.

Looking further out, management expects net move-in volumes — the pace at which built capacity is occupied and begins generating revenue — to more than double in 2027, with growth weighted toward the second half of that year, setting up what Newman described as a “significant acceleration of EBITDA growth” heading into 2028.

For the full year, GDS lifted its revenue guidance to between 12.7 billion yuan and 13 billion yuan, up from the 12.4 billion to 12.9 billion yuan it previously targeted, implying year-on-year growth of 11.1% to 13.7%. It similarly raised its adjusted EBITDA guidance to 5.9 billion yuan to 6.1 billion yuan. On a pro forma basis stripping out one-time items, first-half adjusted EBITDA already grew 12.7% year-on-year.

“With strengthened financial standing and funding capabilities to support our business expansion, we remain focused on creating sustainable, long-term value for our business partners and shareholders,” Newman said.

With bookings running at record levels, a fast-growing backlog and China’s AI infrastructure race still in its early stages, GDS management appears increasingly convinced that the company’s best growth chapter is still ahead.

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