On August 13, GDS Holdings Ltd (09698), a leading developer and operator of high-performance data centers in China, released its unaudited financial results for the second quarter ending June 30, 2026. The report showed net revenue for the quarter reached 3.088 billion yuan (RMB), a year-on-year increase of 6.5%. Gross margin fell 2.3 percentage points to 21.5%, due to a higher proportion of utility costs. Net profit attributable to equity holders was 838 million yuan, with a net profit margin of 27.1%. Adjusted EBITDA was 1.406 billion yuan, up 2.5% year-on-year, with an adjusted EBITDA margin of 45.5%, a decline of 1.8 percentage points.
The market responded positively to the company's second-quarter performance. On August 14, shares of GDS-SW opened sharply higher in Hong Kong, reaching an intraday high of 35.16 Hong Kong dollars, representing a maximum gain of 13.3%.
AI Demand Drives Growth, Full-Year Guidance Raised
According to industry observations, market optimism was partly fueled by the positive surprise from GDS-SW's upward revision of its full-year guidance. The company now expects full-year 2026 net revenue to be in the range of 12.7 billion to 13.0 billion yuan, representing year-on-year growth of 11.1% to 13.7%. Adjusted EBITDA is projected to be between 5.9 billion and 6.1 billion yuan, an increase of 9.2% to 12.9% year-on-year.
Strong performance in several key operational metrics in the first half of the year also provided support for growth in the latter half. As of June 30, 2026, the company's total signed and pre-signed area was 784,800 square meters, a year-on-year increase of 18.2%. The billed area was 542,200 square meters, up 13.2% year-on-year. The current billing rate was 79.2%, an improvement of 1.7 percentage points year-on-year. At the end of the second quarter, the pre-signing rate for projects under construction reached 89.2%, up 14.5 percentage points year-on-year. In the industry, signed and pre-signed area, along with billing rates, are leading indicators for observing the medium-to-long-term performance of data center operators.
In terms of new orders, company management stated during the second-quarter earnings call that the newly signed computing power capacity in the second quarter of 2026 was 260MW. The cumulative new signings in the first half of the year reached 470MW, a record high. As of the end of the second quarter, the company had secured 600MW of intent reservations for computing power resources, with a binding order backlog of 757MW, primarily under take-or-pay contracts. Given the strong sales momentum driven by AI demand, the company has raised its full-year sales target to 1 GW.
Huang Wei, Chairman and CEO of GDS Holdings Ltd, stated that in the second quarter, while advancing order delivery, the company maintained a high level of net new contract signings. Based on current progress, the company's total sales contracts for the year are expected to set a record, far exceeding the initial target. The company is very optimistic about the market opportunities presented by domestic AI demand and firmly believes it has the ability to seize this opportunity and drive large-scale business growth.
Optimizing Capital Structure, Investing 30-50 Billion Yuan in Data Centers
Alongside its business expansion, GDS Holdings Ltd plans to invest between 30 billion and 50 billion yuan in data center construction over the next three years. The company has raised its 2026 capital expenditure guidance from approximately 9 billion yuan to 10 billion yuan. The data center industry is asset-heavy, with long project construction cycles and large capital requirements. Increased capital expenditure will test the company's ability to raise and deploy funds.
In recent years, GDS Holdings Ltd has built a diversified financing system, including equity, debt, and asset securitization, to supplement funds and optimize capital allocation through various channels. In 2025, the company completed an ABS asset securitization project and the initial issuance of C-REITs, opening up asset securitization financing channels. In early 2026, it issued 300 million US dollars in convertible preferred shares to Huatai Capital to supplement long-term funds. As of the end of the second quarter of 2026, the company's cash and cash equivalents stood at 14.927 billion yuan, a year-on-year increase of 13.7%. Meanwhile, the company's asset-liability ratio was 61.25%, a decrease of 6.44 percentage points year-on-year, indicating improved financial stability.
Furthermore, through an external investment, GDS Holdings Ltd recognized a 960 million yuan investment income under the equity method in the second quarter. If the related assets subsequently generate cash returns, these funds will be reinvested in the company's domestic data center projects. Diversified financing channels and mature asset realization capabilities can help GDS Holdings Ltd gain a first-mover advantage during the industry's expansion window and enhance its ability to withstand economic cycles. During a period of concentrated computing power demand release, small and medium-sized IDC companies often face constraints from capital size and financing costs, making it difficult to expand capacity and deliver on time. In contrast, leading IDC companies possess the comprehensive ability to quickly take on large customers' computing power needs, rapidly advance project construction, and continuously optimize their capital structure.
Anchoring AI Computing Power Demand, Strategically Positioning Resources
In terms of resource layout, GDS Holdings Ltd adopts a "mature market plus emerging hub" model to address clients' differentiated computing power needs. Data centers in core economic circles like the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Guangdong-Hong Kong-Macao Greater Bay Area, and the Chengdu-Chongqing area primarily host latency-sensitive services such as financial trading and real-time inference. Meanwhile, national-level hub nodes of the "East Data, West Computing" project, such as Ulanqab, Zhongwei, and Helinger, focus on deploying large-scale computing clusters for use cases like large model offline training. These two types of business scenarios complement each other, releasing the synergistic value of cross-regional deployment.
In June 2026, the company signed a strategic cooperation agreement with the Ulanqab city government, planning to invest over 30 billion yuan in the next five years to build a large-scale, GW-level, zero-carbon smart computing cluster. The significance of establishing a presence in western computing hubs lies in securing scarce, high-capacity electricity quotas while leveraging local energy advantages to reduce long-term operating costs. Currently, leading cloud service providers have incorporated renewable energy computing into their procurement standards. A high green electricity ratio helps enhance the company's competitiveness in securing large-scale orders. Coupled with support from local energy consumption and grid connection policies, early deployment in western hubs can help the company reserve long-term, stable production capacity and optimize the electricity cost structure of its AI business.
The business layout of GDS Holdings Ltd reflects the changing competitive dynamics of the data center industry. Competition is no longer solely about rack scale and geographic location. The ability to secure power resources, achieve high-density data center construction, maintain capital reserves, deliver projects quickly, and operate assets with precision have become core competitive barriers, driving a reshaping of the industry's overall valuation system. The current expansion cycle of the computing infrastructure industry is driven by large model iteration, the comprehensive penetration of inference scenarios, and the deployment of multi-agent applications. This demand is characterized by long-term rigidity, which is distinctly different from the short-term, impulse-driven demand seen during the past cloud computing phase. Global technology companies are continuously increasing capital investment in computing infrastructure, positioning data centers, as core AI infrastructure, as a primary beneficiary of this trend.
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