Strong Growth Prospects and Strategic Positioning Drive Buy Rating for VNET Group, Inc.

VNET Group, Inc. Sponsored ADR (VNET – Research Report), the Technology sector company, was revisited by a Wall Street analyst on May 22. Analyst Daley Li from Bank of America Securities reiterated a Buy rating on the stock and has a $13.80 price target.

Daley Li’s rating is based on the strong growth prospects of VNET Group, Inc., particularly in its wholesale internet data center (IDC) business. The company is expected to report a significant 19% year-over-year increase in revenue for the first quarter of 2025, driven largely by a remarkable 94% growth in its wholesale IDC segment. This growth is attributed to a rapid pace of customer move-ins, which is anticipated to result in high utilization rates shortly after project delivery.
Additionally, VNET’s strategic positioning in areas with abundant renewable energy resources supports its capacity expansion to meet the rising demand for model training. Despite potential challenges from the US AI chip ban, the impact is expected to be minimal due to AI chip reserves by major Chinese companies and the development of domestic alternatives. These factors, combined with a stable performance in the retail IDC business, underpin Li’s Buy rating and the price objective of $13.80.

VNET’s price has also changed dramatically for the past six months – from $3.750 to $6.050, which is a 61.33% increase.