GDS Holdings Ltd. (NASDAQ:GDS) stock was volatile Thursday after the data center operator reported second-quarter results and raised its full-year revenue outlook amid strong AI-driven demand.
The stock initially fell following the earnings release but quickly reversed course. GDS shares were recently up more than 5% as investors weighed the results against the company’s stronger outlook and accelerating AI demand.
During the earnings call, CEO William Huang said, “AI is transforming our business,” adding that sales momentum is “the strongest we have ever seen.”
GDS reported earnings of 52 cents per share, below the analyst estimate of $1.35. Revenue of $455.11 million also missed the $463.16 million consensus estimate.
AI Demand Drives Bookings And Backlog
Revenue rose 6.5% year over year, while adjusted EBITDA increased 2.5%. Adjusted EBITDA margin fell to 45.5% from 47.3% a year earlier.
GDS ended the quarter with nearly 20 billion Chinese yuan in cash. Net leverage stood at 4.7 times annualized adjusted EBITDA.
Total committed and pre-committed area increased 18.2% year over year to 784,802 square meters as of June 30. Utilized area rose 13.2% to 542,236 square meters.
Area in service increased 10.8% to 684,977 square meters. Utilization improved to 79.2% from 77.5% a year earlier.
GDS secured 260 megawatts of new bookings during the quarter and raised its full-year booking target to 1 gigawatt, supported by strong demand tied to artificial intelligence.
The company also secured 600 MW of additional reservations and expects more than 1 GW of new reservations in 2026.
Demand is coming from major Chinese technology companies and emerging AI companies. First-half bookings were split roughly evenly between established and new markets, including Ulanqab, Horinger, South Wan and Zhongwei.
GDS’ backlog climbed to 757 MW from 450 MW at the start of 2026. Management expects the backlog to exceed 1 GW by year-end, with average adjusted EBITDA estimated at 2.2 million Chinese yuan per megawatt.
The company recorded 145 MW of net move-ins during the first half and expects another 90 MW in the second half. That would bring full-year move-ins to about 235 MW.
GDS Raises 2026 Revenue Outlook
GDS raised its fiscal 2026 revenue outlook to $1.866 billion to $1.910 billion from its previous forecast of $1.749 billion to $1.819 billion. The revised range compares with the analyst estimate of $1.840 billion.
The company also raised its 2026 capital expenditure forecast to 10 billion Chinese yuan from 9 billion Chinese yuan. New capacity is expected to cost about 20 million Chinese yuan per MW.
GDS plans to fund projects with a mix of 60% debt and 40% equity at the project level.
The company expects move-ins to more than double in 2027, with most activity weighted toward the second half of the year. GDS expects further growth in 2028.
GDS Price Action: GDS Holdings shares were up 5.18% at $34.43 at the time of publication on Thursday, according to Benzinga Pro data.
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