GDS Holdings Ltd. is capitalizing on a surge in artificial intelligence demand in China, securing a record 1 gigawatt of new bookings and reservations this year and prompting the company to launch a new multi-billion dollar investment cycle. The data center operator’s stock rose more than 8 percent after it reported first-quarter earnings that significantly beat analyst estimates.
"We started 2026 with very strong sales," William Huang, Chairman and Chief Executive Officer of GDS, said in a statement. "During the first quarter, we recorded net new bookings of around 200MW, the highest level ever for a single quarter. With AI infrastructure demand intensifying, we believe GDS is uniquely positioned to capture the next phase of growth."
The company reported first-quarter diluted earnings of $1.53 per American Depositary Share, easily surpassing the Zacks Consensus Estimate of $1.06. Normalized net revenue for the quarter increased 7.9 percent year-over-year to RMB 2.94 billion ($425.9 million), while adjusted EBITDA grew 8.0 percent. The company’s backlog grew to nearly 600 megawatts, which management expects to become billable over the next six to eight quarters.
This wave of AI-driven demand marks the beginning of a multi-year growth cycle for GDS, supported by the increasing availability of domestic chips in China. To meet this demand, the company is preparing to invest RMB 30 billion to RMB 50 billion (approximately $4.2 billion to $7 billion) over the next three years. This capital will be used to build out its recently expanded land bank, which now holds a total capacity of nearly 4 gigawatts.
AI Fuels Unprecedented Booking Surge
The scale of new customer demand is a significant step-change for GDS. Huang noted that customers are planning future deployments at an "unprecedented scale," with some hyperscale clients planning gigawatt-scale deployments within a single cluster.
Year-to-date, the company has already achieved total new bookings and reservations of over 1 gigawatt, giving it "near certainty" of winning follow-on orders. This activity puts GDS on track to exceed its 2026 sales target of at least 500 megawatts. The company initiated about 400 megawatts of new construction over the past 15 months, which it said is almost entirely pre-committed.
Capital Plan to Meet Demand
Chief Financial Officer Dan Newman outlined that a midpoint investment of RMB 40 billion could be financed with approximately 60 percent project debt, consistent with the company’s historical model. The remainder would be funded through operating cash flow, asset monetization, and cash on the balance sheet.
GDS is in a strong position to fund this expansion. The company ended the first quarter with more than RMB 19 billion ($2.7 billion) in cash and time deposits. This was bolstered by receiving $385 million from the partial sale of its stake in DayOne Data Centers and $300 million from a private placement of convertible preferred shares. The company’s net debt to last-quarter annualized adjusted EBITDA ratio fell to 4.7 times from 6.8 times at the end of 2024, providing significant financial flexibility for the new investment cycle. GDS maintained its full-year guidance for 2026.
This article is for informational purposes only and does not constitute investment advice.
