GDS Holdings (GDS) AI Stock Analysis

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GDS Holdings

(NASDAQ:GDS)

Rating:66Neutral

Price Target:

$34.00

▲(8.25% Upside)

GDS Holdings' strong earnings call performance and financial growth are significant positives. However, high leverage, negative free cash flow, and valuation concerns weigh on the overall score.

Positive Factors

Future Growth Prospects

The anticipated IPO of DayOne is expected to boost GDS's valuation due to its growth potential and long contract durations.

International Expansion

DayOne's international business, where GDS holds a 35.6% stake, saw revenue surge 1.4 times year-over-year, driven by rising IT capacity utilization.

Revenue Growth

The 12% year-over-year revenue growth in the China business was driven by a 15% expansion in the area utilized.

Negative Factors

Asset-Backed Securities Impact

Adjusted EBITDA growth guidance for the upcoming fiscal year is slightly below market expectations due to the impact of asset-backed securities.

Chip Supply Concerns

Uncertainty around chip supply in China is causing the company to be very cautious in accepting new orders.

Investor Sentiment

Some investors were disappointed with the guide for China and the lack of an accelerated international IPO pacing, leading to a stock decline.

GDS Holdings (GDS) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$6.88B

Dividend YieldN/A

Average Volume (3M)2.00M

Price to Earnings (P/E)―

Beta (1Y)1.48

Revenue Growth9.42%

EPS Growth99.84%

CountryUS

Employees2,276

SectorTechnology

Sector Strength94

IndustryInformation Technology Services

Share Statistics

EPS (TTM)0.06

Shares Outstanding200,928,820

10 Day Avg. Volume1,969,598

30 Day Avg. Volume2,004,359

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.58

Enterprise Value/Revenue0.97

Enterprise Value/Gross Profit4.31

Enterprise Value/Ebitda1.86

Forecast

1Y Price Target

$40.35

Price Target Upside28.46% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering11

GDS Holdings Business Overview & Revenue Model

Company DescriptionGDS Holdings Limited is a leading developer and operator of high-performance data centers in China. The company provides a range of services including colocation, cloud computing, and disaster recovery solutions, primarily targeting large enterprises and cloud service providers. GDS operates multiple data centers across key cities in China, offering advanced infrastructure and high reliability to support the growing demand for digital services and data storage in the region.

How the Company Makes MoneyGDS Holdings generates revenue through several key streams, primarily from colocation services where customers rent space, power, and cooling for their IT equipment within the data centers. The company charges fees based on the amount of space and power consumed by its clients. Additionally, GDS earns revenue from cloud services, which include infrastructure as a service (IaaS) offerings that enable customers to deploy and manage their applications in the cloud. The company also benefits from long-term contracts with major clients, ensuring stable cash flow. Strategic partnerships with major technology firms and cloud providers enhance its service offerings and customer base, further contributing to its earnings. Factors such as the increasing demand for data storage, cloud computing growth, and the expansion of internet services in China play significant roles in driving GDS's revenue growth.

GDS Holdings Earnings Call Summary

Earnings Call Date:May 20, 2025

(Q1-2025)

% Change Since: 15.99%|

Next Earnings Date:Aug 20, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong performance by GDS Holdings with significant revenue and EBITDA growth, successful asset monetization, and strategic expansions both domestically and internationally. However, there are concerns about decreasing MSR per square meter, potential short-term AI chip supply issues, and regulatory challenges in China. Overall, the positive aspects outweigh the negatives.

Q1-2025 Updates

Positive Updates

Strong Revenue and EBITDA Growth

In the first quarter of 2025, GDS Holdings achieved revenue growth of 12% and adjusted EBITDA growth of 15% year-on-year, marking the highest growth rate in the past two years.

Mega Deal in AI Sector

GDS signed a major deal of 152 megawatts during Q1 2025, indicating strong demand in the AI era. The order requires data center delivery within six months, with full move-in commitments within the following six months.

Successful Asset Monetization

Completed the first ADS transaction in Q1 2025 and made significant progress on the C-REIT transaction, providing financing flexibility and enabling cash recycling in China.

Expansion of DayOne Subsidiary

DayOne added 70 megawatts of new commitments, expanded into new markets in Thailand and Europe, and is on track to meet its target of 1 gigawatt of total power committed within three years.

Financial Discipline and Deleveraging

Maintained strict financial discipline with a focus on creating equity value with low investment and financing risk. The adjusted EBITDA margin increased to 48.6% from 46.9% year-on-year.

Negative Updates

Decrease in MSR Per Square Meter

The MSR per square meter decreased by 2.6% compared to Q1 2024, affecting the revenue growth potential.

Short-term Uncertainty in AI Chip Supply

There are short-term uncertainties around AI chip supply in China, which could affect demand and deployment plans.

Possible Regulatory Challenges in China

Concerns were raised about new government regulations controlling the expansion of AI data centers, which may affect private companies like GDS Holdings.

Company Guidance

During the first quarter of 2025, GDS Holdings Limited provided guidance indicating robust growth and strategic positioning in the AI-driven market. The company reported a 12% year-on-year increase in revenue and a 15% growth in adjusted EBITDA, marking the highest growth rate in two years. The utilization rate reached 75.7%, with gross move-ins of approximately 20,000 square meters concentrated in Tier 1 markets. GDS highlighted a mega deal of 152 megawatts signed during the quarter, showcasing strong demand for AI inferencing in these markets. The company anticipates delivering around 40% of its current backlog by year-end and is well-prepared with 900 megawatts of capacity for future developments. Financially, GDS demonstrated significant progress in asset monetization, completing its first ADS transaction and advancing its C-REIT transaction. For the full year, GDS maintained its guidance for revenue and adjusted EBITDA growth, projecting high-single-digit percentage increases in quarterly adjusted EBITDA year-on-year, despite the deconsolidation of assets due to the ABS transaction.

GDS Holdings Financial Statement Overview

Summary

GDS Holdings has demonstrated strong revenue growth and improved profitability margins, with a notable increase in total revenue and enhanced operational efficiency. However, challenges remain due to high leverage and negative free cash flow.

Income Statement

Positive

GDS Holdings exhibits strong revenue growth with a notable increase in total revenue from 2024 to TTM (Trailing-Twelve-Months). The gross profit margin remains robust, although the net profit margin is buoyed by a large net income figure in the TTM, which requires careful interpretation. The EBIT and EBITDA margins have improved significantly over the years, indicating enhanced operational efficiency.

Balance Sheet

Positive

The balance sheet reflects moderate stability with a substantial stockholders' equity base. However, the debt-to-equity ratio is relatively high, suggesting leveraged financial operations. The equity ratio indicates a strong asset base, but the significant amount of total liabilities presents a potential risk factor.

Cash Flow

Positive

The cash flow statement highlights a substantial increase in operating cash flow, which is a positive indicator of liquidity. The company has managed to improve its free cash flow position from a deficit, though it remains negative in the TTM. The operating cash flow to net income ratio is robust, indicating efficient cash management relative to earnings.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.32B	9.96B	9.33B	7.82B	5.74B
Gross Profit	2.22B	1.92B	1.94B	1.78B	1.55B
EBITDA	4.39B	1.36B	4.19B	3.36B	2.43B
Net Income	3.43B	-4.29B	-1.27B	-1.19B	-669.21M
Balance Sheet
Total Assets	73.65B	74.45B	74.81B	71.63B	57.26B
Cash, Cash Equivalents and Short-Term Investments	7.87B	7.71B	8.61B	9.97B	16.26B
Total Debt	44.46B	47.99B	44.68B	37.79B	24.63B
Total Liabilities	49.98B	54.32B	50.63B	47.10B	31.69B
Stockholders Equity	23.54B	19.96B	24.07B	24.47B	25.57B
Cash Flow
Free Cash Flow	-1.03B	-4.19B	-4.95B	-8.50B	-7.70B
Operating Cash Flow	1.94B	2.07B	2.86B	1.20B	320.89M
Investing Cash Flow	-8.76B	-6.33B	-11.27B	-13.69B	-9.38B
Financing Cash Flow	17.06B	3.14B	4.86B	8.12B	20.14B

GDS Holdings Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price31.41

Price Trends

50DMA

32.41

Negative

100DMA

28.56

Positive

200DMA

27.42

Positive

Market Momentum

MACD

0.12

Positive

RSI

38.60

Neutral

STOCH

5.37

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GDS, the sentiment is Neutral. The current price of 31.41 is below the 20-day moving average (MA) of 35.44, below the 50-day MA of 32.41, and above the 200-day MA of 27.42, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 38.60 is Neutral, neither overbought nor oversold. The STOCH value of 5.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GDS.

GDS Holdings Risk Analysis

GDS Holdings disclosed 119 risk factors in its most recent earnings report. GDS Holdings reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

If GDSH's beneficial ownership in GDSI falls below 50% or cease to have the ability to appoint the majority of the board of directors of GDSI or otherwise ceases to have the control over the management and policies of GDSI, a change of control would be triggered under certain of GDSI's real property leases, customer agreements and/or loan agreements, and the business development, financial condition and future prospects of GDSH and/or GDSI may be materially and adversely affected. Q4, 2023

Our customer agreement commitments are subject to reduction, potential cancellation and non-renewal upon expiry; if renewed, the renewal may be at lower pricing terms or for a lower commitment of utilization. Q4, 2023

GDS Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WNS	79 Outperform	$3.21B	19.99	21.23%	―	1.94%	26.15%
DXC	68 Neutral	$2.47B	6.68	12.60%	―	-4.93%	497.03%
GDS	66 Neutral	$6.88B	―	0.74%	―	9.42%	99.84%
Sector *	61 Neutral	€6.51B	18.05	3.81%	2.09%	2.46%	-30.42%
VNET	55 Neutral	$2.14B	135.20	2.28%	―	13.93%	―
CNDT	49 Neutral	$393.36M	80.84	2.21%	―	-14.36%	-73.74%
KD	47 Neutral	$6.96B	24.51	26.55%	―	-3.44%	―

* Technology Sector Average

Performance Comparison

GDS

GDS Holdings

31.41

19.26

158.52%

VNET

VNET Group, Inc. Sponsored ADR

7.77

5.98

334.08%

WNS

75.02

15.52

26.08%

CNDT

Conduent

2.43

-0.89

-26.81%

DXC

DXC Technology

13.71

-5.57

-28.89%

Kyndryl Holdings Incorporation

29.98

6.34

26.82%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 15, 2025